Who Benefits from R&D Tax Policy? = ¿Quién se beneficia de los incentivos fiscales a la inversión en I+D? Articles uri icon

publication date

  • December 2010

start page

  • 145

end page

  • 170


  • 45


  • 13

International Standard Serial Number (ISSN)

  • 1138-5758


  • This paper explores which types of firms benefit more from the R&D fiscal incentives and the effect of this type of instrument on the performance of R&D activities. Spain is considered the most generous
    countries in the OECD in fiscal treatment of R&D, yet our data
    reveal that tax incentives are little known and, especially, seldom used
    by firms. Restricting our empirical analysis to those firms that do
    report knowing about such incentives, we investigate the average effect
    of tax incentives on innovation, using both nonparametric methods
    (matching estimators) and parametric methods (Heckman's two-step
    selection model). First, we find that large firms, especially those that
    implement innovations, are more likely to use the tax incentives, while
    small and medium enterprises encounter some obstacles to using them.
    Secondly, the average effect of the policy is positive, but significant
    only in large firms. Our main conclusion is that tax incentives increase
    innovative activities by large and high-tech sector firms, but may be
    used only randomly by small medium enterprises.