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Investor Group

Where a worldwide group has an interest in non-group entities the results of the entity will not be consolidated, on a line-by-line basis, in the group’s financial statements. As a result, any amounts of interest and other financing costs incurred by the non-group entity will not ordinarily be included within group-interest.

»Ê¹ÚÌåÓýapp results of the non-group entity will be included into the group’s financial statement as follows:

• »Ê¹ÚÌåÓýapp group’s share of the results of JVs and associates.
• »Ê¹ÚÌåÓýapp fair value movements of the group’s investment in subsidiaries held at fair value.

»Ê¹ÚÌåÓýappse amounts will be recognised as items of profit or loss in the group’s financial statements. »Ê¹ÚÌåÓýappy will therefore be included in the group-EBITDA of the group.

»Ê¹ÚÌåÓýapprefore, in comparison to a group entity, any interest incurred by the non-group entity will not be recognised as contributing to the net group-interest expense of the worldwide group. However any interest incurred by the group entity will be included in the group’s net group-interest expense.

As a result, in comparison with an investment in a group entity, this will supress the group ratio of the worldwide group. »Ê¹ÚÌåÓýapp non-group entity will not increase the net group interest expense of the worldwide group but if the non-group entity is profitable then this will increase group-EBITDA.

»Ê¹ÚÌåÓýapp interest allowance (non-consolidated investment) election provides flexibility around this treatment.

Investee Group

Opaque entities

Where the non-group entity is a corporate body it is an opaque entity and will be taxed at the entity level and not taxed in the worldwide group. In some circumstances the entity may have a relatively low group ratio to that of its investors. »Ê¹ÚÌåÓýapp entity does have the opportunity to obtain a similar group ratio to that of its investors by using the Group Ratio (Blended) Rule.

Transparent Entities

Where the non-group entity is a transparent entity the taxable profits of the entity that belong to the worldwide group will be taxed in the worldwide group.