The combination of the shareholder model and the exemption method have over the past 15 years led to a significant build-up of capital in Norwegian holding companies. Many of these companies function as private "savings banks" and are characterized by the fact that they hardly pay dividends.

In an article forthcoming in Samfunnøkonomen, Petter Bjerksund and Guttorm Schjelderup show that a shareholder company can avoid tax on capital gains from shares and dividend outside the European Economic Area (EEA) by using financial derivatives (a total return swap). In other words, when the company uses financial derivatives, the company obtains tax exemption for income that in principle is not intended to be covered by the exemption method.

Bjerksund and Schjelderup look at a company that owns Norwegian shares and wants an exposure to share income from the area outside the EEA. The company can achieve this either by investing directly or by using a financial derivative. Share income outside the EEA is not covered by the exemption method and is taxed by the corporate tax at a rate of 22 percent. They show that regardless of whether the equity derivative falls under the exemption method or not, the company can avoid taxation by a total return swap.

In their article they also discuss possible solutions related to the possibility of circumvention provided by financial derivatives. They argue that tax cuts cannot be a solution, and that it is difficult to change the tax treatment of derivatives. Their takeaway is that the problem is difficult to solve and that as long as the exemption method is in place, the loophole cannot be closed.

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