Contract analysis

I. Executive Summary and Purpose The purpose of this memorandum is to analyze the implications of the Convention Between the United States of America and the Federal Republic of Germany 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 (as amended by the Protocol signed June 1, 2006, the "US-Germany Treaty" or the "Treaty")

1. German Statutory Withholding Tax on Dividends. Dividends paid by Halcyon to non-resident shareholders are subject to German withholding tax (Kapitalertragsteuer) at a statutory rate of 25%, plus a solidarity surcharge (Solidaritätszuschlag) of 5.5% thereon, resulting in a total effective statutory withholding rate of 26.375%.

2. Reduced Treaty Rate. Under Article 10(2)(b) of the US-Germany Treaty, the rate of German withholding tax on dividends paid to qualifying US resident holders who are the beneficial owners thereof and who hold less than 10% of the voting stock of the Company is reduced to 15% of the gross amount of such dividends. A further reduced rate of 5% applies under Article 10(2)(a) to qualifying US corporate holders that dir

3. US Foreign Tax Credits. US holders who are subject to German withholding tax on dividends may be eligible to claim a credit against their US federal income tax liability for German taxes withheld, subject to the limitations of Sections 901 and 904 of the Internal Revenue Code of 1986, as amended (the "Code"). The creditability of German taxes is generally limited to the Treaty-rate amount (15% or 5%, as applicable

4. Qualified Intermediary and Withholding Mechanics. The Qualified Intermediary ("QI") status of Meridian Trust and the operational capabilities of the German sub-custodian are critical to determining whether reduced treaty-rate withholding can be applied at source (Freistellungsverfahren) or whether US holders must bear the full statutory rate and subsequently apply for refunds. This issue requires further coordinat

5. PFIC Status. Based on our preliminary analysis of Halcyon's financial statements, business operations, and asset composition, we do not expect Halcyon to be classified as a passive foreign investment company ("PFIC") within the meaning of Section 1297 of the Code for its taxable year ending December 31, 2025 or for the foreseeable future. A separate detailed PFIC analysis memorandum has been prepared under this ma

6. Qualified Dividend Income. Provided Halcyon is not classified as a PFIC and the applicable holding period requirements are satisfied, dividends received by individual US holders may qualify as "qualified dividend income" eligible for taxation at preferential long-term capital gains rates.

II. Background on the Offering and ADS Structure A. The Issuer Halcyon Semiconductor Aktiengesellschaft is a German stock corporation (Aktiengesellschaft) organized under the laws of the Federal Republic of Germany, with its registered office and principal executive offices located at Maximilianstraße 72, 80539 Munich, Germany. The Company operates in the advanced power semiconductor device industry, with a focus on

III. German Domestic Taxation of Dividend Distributions A. German Withholding Tax on Dividends — Statutory Framework Under the German Income Tax Act (Einkommensteuergesetz — "EStG") and the German Corporation Tax Act (Körperschaftsteuergesetz — "KStG"), dividends paid by a German stock corporation (Aktiengesellschaft) to its shareholders are generally subject to German withholding tax (Kapitalertragsteuer). This tax

IV. US-Germany Income Tax Treaty — Article 10 (Dividends) A. Overview of Article 10

Article 10 of the US-Germany Treaty governs the taxation of dividends paid by a resident of one Contracting State to a resident of the other Contracting State. The relevant provisions are summarized as follows:

Article 10(1) provides that dividends paid by a company that is a resident of a Contracting State (in this case, Germany) to a resident of the other Contracting State (in this case, the United States) may be taxed in the state of residence of the recipient (i.e., the United States). This provision confirms the primary right of the residence state to tax dividend income received by its residents.

Article 10(2) provides that such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident (i.e., Germany) and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State (i.e., the United States), the tax so charged shall not exceed: (a) 5% of the gross amount of the dividends if the beneficial owner

V. Qualified Intermediary (QI) Regime and Withholding Mechanics A. Overview of the QI Framework The IRS Qualified Intermediary ("QI") program, established under Revenue Procedure 2017-15 (as amended and superseded by subsequent revenue procedures, most recently Revenue Procedure 2022-43), allows non-US financial intermediaries (such as banks, broker-dealers, and custodians) to enter into agreements with the IRS under

VI. Documentation Requirements for US Holders Claiming Treaty Benefits A. IRS Documentation US holders of ADSs should be aware of the following documentation requirements in connection with claiming treaty benefits on dividends received from Halcyon: IRS Form W-9. US individual holders and US entities that are beneficial owners of ADSs should provide a properly completed IRS Form W-9 (Request for Taxpayer Identificat

VII. US Federal Income Tax Implications A. Treatment of ADS Holders as Owners of Underlying Shares For US federal income tax purposes, holders of ADSs are generally treated as the owners of the underlying ordinary shares represented by those ADSs. This treatment is consistent with Revenue Ruling 65-218, 1965-2 C.B. 566, and the general approach taken by the IRS in treating American depositary receipt holders as the o

Section 988 Gain or Loss. Gain or loss attributable to fluctuations in the EUR/USD exchange rate between the date dividends are received (or constructively received) and the date on which the EUR proceeds are converted to USD is generally treated as ordinary income or loss under Section 988 of the Code, rather than as capital gain or loss. This treatment applies regardless of whether the overall disposition of the AD

VIII. Taxation of Dispositions of ADSs A. Capital Gain or Loss A US holder who sells, exchanges, or otherwise disposes of ADSs will generally recognize capital gain or loss equal to the difference between (a) the amount realized on the disposition (i.e., the cash proceeds plus the fair market value of any property received) and (b) the holder's adjusted tax basis in the ADSs. The holder's initial tax basis in the ADS