Contract analysis

I. Executive Summary You have asked us to analyze the material United States federal income tax consequences to U.S. holders of American Depositary Shares ("ADSs") issued in connection with the proposed initial public offering (the "IPO" or the "Offering") of Solstice Biomedical Devices Limited ("Solstice," "SBD," or the "Company"), an Irish company incorporated under the Companies Act 2014 (Companies Registration Of

1. PFIC Status. Based on our analysis of Solstice's audited FY2022 financial statements and management's projections for FY2023, Solstice does not expect to be classified as a "passive foreign investment company" ("PFIC") within the meaning of Sections 1291 through 1298 of the Internal Revenue Code of 1986, as amended (the "Code"), for its taxable year ending December 31, 2023. This determination is, however, inheren

2. Irish Dividend Withholding Tax. Irish dividend withholding tax ("DWT") at the standard statutory rate of 25% is reduced to 15% for qualifying U.S. holders who are eligible for benefits under the Convention between the Government of the United States of America and the Government of Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital Gains (t

3. Treatment of ADSs. ADSs will generally be treated as equity in a foreign corporation for U.S. federal income tax purposes, and holders of ADSs will be treated as the beneficial owners of the underlying ordinary shares represented by such ADSs. Deposits and withdrawals of ordinary shares in exchange for ADSs will not constitute taxable events for U.S. federal income tax purposes.

4. Gain on Disposition. Gain recognized by a U.S. holder upon the sale, exchange, or other taxable disposition of ADSs will generally be treated as capital gain, and will be long-term capital gain if the ADSs have been held for more than one year at the time of disposition. Long-term capital gains of non-corporate U.S. holders are currently taxed at a maximum federal rate of 20% (plus the 3.8% net investment income t

5. Dividends. Distributions paid by Solstice with respect to ADSs that are treated as dividends for U.S. federal income tax purposes may qualify for the preferential qualified dividend rate of 20% (plus the 3.8% net investment income tax) for non-corporate U.S. holders, provided that Solstice is not classified as a PFIC in the year of distribution or the preceding taxable year, that the ADSs are listed on a U.S. nati

6. Transfer Pricing. The intercompany transfer pricing arrangements between Solstice and its wholly owned U.S. subsidiary, Solstice Surgical Inc., a Delaware corporation (EIN 87-4231568), operating under a cost-plus intercompany services agreement at a 7.5% markup, are relevant to the PFIC income composition analysis. Income earned by Solstice Surgical Inc. is attributed to Solstice under the look-through rules of Se

II. Treatment of ADSs for U.S. Federal Income Tax Purposes A. General Principles — ADSs as Equity Ownership Under well-established IRS guidance, a holder of ADSs is generally treated for U.S. federal income tax purposes as the beneficial owner of the underlying shares of stock represented by such ADSs. This treatment is supported by Revenue Ruling 58-225, 1958-1 C.B. 234, in which the IRS held that the holder of an A

III. Passive Foreign Investment Company ("PFIC") Analysis The classification of Solstice as a PFIC for any taxable year during which a U.S. holder holds ADSs would have significant adverse U.S. federal income tax consequences for such holder. The following analysis addresses whether Solstice is expected to be classified as a PFIC for its taxable year ending December 31, 2023, and the potential consequences if PFIC st

IV. Taxation of Distributions on ADSs (Dividends) A. U.S. Federal Income Tax Treatment of Dividends Distributions of cash or other property paid by Solstice with respect to ADSs will be treated as dividends for U.S. federal income tax purposes to the extent paid out of the Company's current or accumulated earnings and profits, as determined under U.S. federal income tax principles. It is important to note that U.S. f

V. Taxation of Dispositions of ADSs A. General Treatment — Capital Gain or Loss A U.S. holder who sells, exchanges, or otherwise disposes of ADSs in a taxable transaction will generally recognize capital gain or loss in an amount equal to the difference between (i) the amount realized on the disposition (i.e., the amount of cash and the fair market value of any other property received in exchange for the ADSs) and (i

VI. Net Investment Income Tax In addition to the regular U.S. federal income tax described in Sections IV and V above, certain non-corporate U.S. holders are subject to an additional 3.8% tax on "net investment income" under Section 1411 of the Code (the "Net Investment Income Tax" or "NIIT"). The NIIT applies to individuals, estates, and trusts whose "modified adjusted gross income" exceeds certain threshold amounts

VII. Transfer Pricing Considerations — Solstice Surgical Inc. A. Structure. As described in Section III.D above, Solstice Surgical Inc. (EIN 87-4231568), a Delaware corporation with its principal office at 200 West Adams Street, Suite 1100, Chicago, IL 60606, is a wholly owned subsidiary of Solstice. Solstice Surgical Inc. was incorporated on March 15, 2019, and has served as the Company's principal U.S. operating en

VIII. Information Reporting and Backup Withholding A. Information Reporting Payments of dividends on, and gross proceeds from the sale or other disposition of, ADSs to U.S. holders will generally be subject to information reporting requirements under the Code. Specifically, the Depositary, brokers, and other paying agents will be required to report such payments to the IRS and to the U.S. holder on IRS Form 1099-DIV