Financial VAT may improve trade openness

This paper theoretically and empirically analyzes how the taxation of financial services under VAT (‘financial VAT’) influences trade openness. The empirical analysis uses data from OECD 36 European Union countries for period 1960–2019. Dynamic panel techniques are used, concretely GMM System, an unbalanced is handled. results corroborate that VAT, in particular ‘option-to-tax’ method applied by some Union, positively associated with a country’s