Contract analysis

I. Executive Summary This memorandum analyzes the withholding tax implications on cross-border payments from Meridian Data Solutions GmbH ("Meridian" or "Meridian GmbH"), a German limited liability company, to Lumos Analytics Inc. ("Lumos" or the "Company"), a Delaware C-Corporation headquartered in Palo Alto, California, under the EMEA Channel Reseller Program Agreement (the "Agreement"). In addition, this memorandu

1. Withholding Tax — Business Profits / Royalties. The U.S.-Germany Income Tax Treaty (the "Treaty") reduces withholding on royalties to 0% for payments properly characterized as software resale consideration. We believe the stronger position is that Meridian's payments to Lumos constitute business profits under Article 7 of the Treaty, which are taxable only in the United States absent a German permanent establishme

2. VAT — Reverse Charge Mechanism. Under the EU VAT Directive (Council Directive 2006/112/EC) and its implementing regulations, the reverse charge mechanism applies to business-to-business ("B2B") cross-border supplies of electronically supplied services, including SaaS subscriptions. Meridian GmbH, as the business recipient, is responsible for self-assessing and accounting for German VAT on supplies received from Lu

3. Structuring Recommendations. We set forth below certain recommendations designed to minimize tax leakage, including documentation of Treaty benefits, optimized invoicing practices, and ongoing compliance monitoring as Meridian expands its territorial coverage within EMEA.

II. Background and Transaction Structure A. Parties and Roles Lumos Analytics Inc. Lumos is a Delaware C-Corporation (Employer Identification Number: 84-3291056) with its principal offices located at 4700 Sandhill Road, Suite 300, Palo Alto, California 94304. Lumos's registered agent for service of process in Delaware is Pacific Registered Agents LLC, located at 1209 Orange Street, Wilmington, Delaware 19801. Lumos i

III. Withholding Tax Analysis A. German Withholding Tax on Payments to U.S. Entities

1. German Domestic Law — Characterization of SaaS Resale Payments. Under German domestic tax law, as codified principally in the Einkommensteuergesetz ("EStG") and the Körperschaftsteuergesetz ("KStG"), withholding tax applies to certain categories of payments made by German-resident entities to non-resident recipients. The relevant provisions are as follows:

Section 49(1) No. 2 EStG — Commercial Activities. Income from commercial activities (Einkünfte aus Gewerbebetrieb) earned by a non-resident in Germany is subject to German limited tax liability (beschränkte Steuerpflicht) only if the non-resident maintains a permanent establishment (Betriebsstätte) or a permanent representative (ständiger Vertreter) in Germany. As discussed in Section III.A.3 below, Lumos does not ma

Section 49(1) No. 6 EStG and Section 50a EStG — Withholding on Royalties. German domestic law imposes withholding tax on royalty payments made by German-resident entities to non-resident recipients. Under Section 50a(1) No. 3 EStG, the payor must withhold tax at a rate of 15% (plus the 5.5% solidarity surcharge on the withholding tax amount, resulting in an effective combined rate of 15.825%) on the gross amount of r

2. U.S.-Germany Income Tax Treaty (Convention for the Avoidance of Double Taxation). The United States and the Federal Republic of Germany are parties to a Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital and to Certain Other Taxes, signed June 29, 1989, with a protocol signed June 1, 2006 (collectively, the "Treaty"). The Treaty provides

Article 7 — Business Profits. Under Article 7 of the Treaty, business profits of an enterprise of a Contracting State (in this case, the United States) are taxable only in that State, unless the enterprise carries on business in the other Contracting State (Germany) through a permanent establishment situated therein. If the enterprise does carry on business through a permanent establishment, the profits of the enterp

Article 12 — Royalties. Under Article 12 of the Treaty, royalties arising in a Contracting State (Germany) and beneficially owned by a resident of the other Contracting State (the United States) shall be taxable only in the United States. In other words, the Treaty provides a 0% withholding rate on royalties, eliminating the 15.825% domestic withholding rate that would otherwise apply under Section 50a EStG. For purp

3. Permanent Establishment Risk Assessment. The absence of a German permanent establishment is a critical predicate for the withholding tax analysis under both German domestic law and the Treaty. We have assessed the PE risk as follows: No Physical Presence. Lumos does not maintain any offices, facilities, warehouses, or other fixed places of business in Germany. Lumos has no employees based in Germany, and no Lumos

1. United Kingdom. Meridian Data Solutions UK Ltd, as the pre-approved sub-distributor for the United Kingdom and Ireland, will resell Lumos Prism™ subscriptions in those markets. The payment flow contemplated by the Agreement is that Meridian UK pays Meridian GmbH (as an intra-group payment for resold subscriptions), and Meridian GmbH in turn remits payments to Lumos. Lumos is not expected to receive direct payments

2. France. Meridian Data Solutions SARL, as the pre-approved sub-distributor for France, Belgium, Luxembourg, and French-speaking Switzerland, will resell Lumos Prism™ subscriptions in those markets. As with the UK, the payment flow is expected to be from Meridian France to Meridian GmbH, with Meridian GmbH remitting payments to Lumos. Under French domestic law, withholding tax on royalty payments made by French-resi

3. Other Key EMEA Markets. The EMEA Territory encompasses a broad range of jurisdictions beyond Germany, the United Kingdom, and France. As Meridian expands its resale activities into additional EMEA markets, jurisdiction-by-jurisdiction withholding tax analysis will be required. As a general observation, most EMEA countries have income tax treaties with the United States that provide reduced or zero withholding rate

1. Foreign Tax Credit. In the event that German or other EMEA withholding taxes are imposed on payments to Lumos notwithstanding the Treaty protections described above — for example, due to a characterization dispute, an administrative processing delay, or the absence of a Treaty in a particular jurisdiction — Lumos may claim foreign tax credits under Internal Revenue Code ("IRC") Sections 901 and 903 to offset its U

2. FDII / GILTI Considerations. Lumos's income from foreign resale activities may qualify for the Foreign-Derived Intangible Income ("FDII") deduction under IRC Section 250, which provides an effective reduced U.S. federal income tax rate on certain income derived from sales and services to foreign markets. For taxable years beginning after December 31, 2025, the FDII deduction is scheduled to be 21.875% (down from t

IV. VAT / GST Analysis A. Characterization of Lumos Prism™ for VAT Purposes For purposes of the EU VAT system, the Lumos Prism™ SaaS platform is classified as an "electronically supplied service." This characterization is established by Council Directive 2006/112/EC (the "VAT Directive"), as amended, specifically Article 58, and by Council Implementing Regulation (EU) No. 282/2011, Article 7. Electronically supplied

1. General Rule (Article 44 of the VAT Directive). Under the general rule for B2B supplies of services set forth in Article 44 of the VAT Directive, the place of supply of services provided to a taxable person (i.e., a business) is the place where the recipient is established. This general rule governs the place of supply for electronically supplied services in B2B transactions, as there is no specific derogation for

2. Lumos's VAT Obligations. Lumos is a non-EU entity (a U.S. corporation) supplying B2B electronically supplied services to EU and UK business customers. Under the reverse charge mechanism set forth in Article 196 of the VAT Directive, when a non-EU supplier provides services to an EU business recipient, the recipient (not the supplier) is liable for VAT. The recipient self-assesses the applicable VAT on the supply r

3. Intra-Group Sub-Distribution VAT Treatment. The intra-group payment flows between Meridian GmbH and its sub-distributors (Meridian UK and Meridian France) are themselves subject to VAT rules, as follows: Meridian GmbH to Meridian UK. This is a cross-border B2B supply of electronically supplied services from a German entity to a UK entity. Post-Brexit, the UK is treated as a third country for EU VAT purposes. The U

1. End User Sales to Consumers. While the Agreement primarily contemplates the resale of Lumos Prism™ subscriptions to enterprise customers (i.e., B2B sales), it is possible that Meridian or its sub-distributors may sell subscriptions to non-business end users (consumers), particularly in certain market segments where individual professionals or small business operators may purchase subscriptions for personal use. If

2. Practical Recommendation. We recommend that Lumos confirm with Meridian's General Counsel, Dr. Anneliese Brandt, and with Katarina Voss (who serves as Chief Commercial Officer of Meridian UK), whether end users include any B2C customers. If B2C sales are anticipated, Meridian should ensure that it has an OSS registration in place in Germany prior to the commencement of sales activities, and that Meridian UK has ap

V. Withholding Tax on Late Payment Interest The Channel Reseller Program Agreement provides for late payment interest at a rate of 1.5% per month, equivalent to 18% per annum, compounded monthly. To the extent that Meridian incurs and pays late payment interest to Lumos, the withholding tax treatment of such interest must be considered separately from the treatment of the principal resale payments. German Domestic La

VI. Transfer Pricing Considerations (Cross-Reference) A comprehensive transfer pricing analysis of the reseller arrangement between Lumos and Meridian is set forth in the separate Transfer Pricing Overview Memorandum prepared by Leila Nazari and coordinated with Caldwell & Pryce Advisory LLC (Ingrid Svensson, Managing Director). This Section VI provides a summary cross-reference to the key conclusions of that analysi

VII. Structuring Recommendations to Minimize Tax Leakage Based on the analysis set forth in Sections III through VI above, we recommend the following structuring and compliance measures to minimize tax leakage across the Lumos/Meridian EMEA channel reseller arrangement. A. Payment Flow Optimization The direct payment flow from Meridian GmbH to Lumos (U.S.) is the simplest and most tax-efficient structure. By channeli

VIII. Risk Factors and Caveats The analysis and recommendations set forth in this memorandum are subject to the following risk factors and caveats, which Lumos should consider in evaluating its overall tax posture with respect to the EMEA Channel Reseller Program: Recharacterization Risk. The principal risk identified in this memorandum is the possibility that German tax authorities could recharacterize the SaaS resa