Taxation (International and Other Provisions) Act 2010 section 427

Group interest and group-EBITDA

Section 427 explains how a worldwide group's interest and EBITDA figures are adjusted when the group has made an interest allowance (non-consolidated investment) election and holds interests in associated worldwide groups.

• When a non-consolidated investment election is in effect, the principal group's financial statements are adjusted to strip out income from loans to, and profits or losses from interests held in, associated worldwide groups.
• The principal group's adjusted net group-interest expense and qualifying net group-interest expense are each increased by the appropriate proportion of the corresponding amounts from each associated worldwide group.
• The principal group's group-EBITDA is similarly increased by the appropriate proportion of each associated worldwide group's group-EBITDA.
• The "appropriate proportion" is the share of the associated worldwide group's profits or losses to which the principal worldwide group is entitled during the relevant period of account.

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