In this study, we qualitatively and quantitatively examine the European IP boxes. Thereby, we analyse their impact on IP tax planning and location attractiveness in light of the changes introduced by the OECD’s modified nexus approach. Our results demonstrate that even after introducing the nexus, a considerable reduction in effective average tax burdens is possible. Nonetheless, in line with the policy intention, the nexus effectively prevents excessive reductions of MNEs’ tax burden. Moreover, we account for changes in IP tax planning and observe implicit subsidies for the combination of output- and input-oriented tax incentives. Thus, these combinations reduce MNEs’ tax liabilities and finally, increase the location attractiveness in the post-nexus era.


Müller, Jessica M.
Spengel, Christoph
Steinbrenner, Daniela


Corprate taxation, effective tax rates, tax planning