Contract analysis

I. Executive Summary You have asked us to analyze the transfer pricing implications of any intercompany on-lending arrangement whereby Ironhaven Data Centers LLC ("IHDC" or the "US Parent"), a Delaware limited liability company, on-lends a portion of the proceeds of the $950,000,000 Senior Secured Term Loan B facility (the "Term Loan" or the "Credit Facility") to its wholly-owned German subsidiary, Ironhaven Frankfur

II. Background and Transaction Overview A. The Borrower Group The Ironhaven group consists of the following principal entities relevant to this analysis: Ironhaven Data Centers LLC ("IHDC") is a Delaware limited liability company headquartered at 4500 Dominion Ridge Boulevard, Suite 300, Ashburn, Virginia 20147 (EIN 84-3291057). IHDC is the primary operating entity within the Ironhaven group and serves as the Borrowe

III. Applicable Legal and Regulatory Framework A. German Transfer Pricing Law The German transfer pricing framework is anchored in the arm's-length principle as codified in the Außensteuergesetz (AStG) and supplemented by the Abgabenordnung (AO), the relevant Einkommensteuergesetz (EStG) and Körperschaftsteuergesetz (KStG) provisions, and the administrative guidance issued by the Bundesministerium der Finanzen (BMF).

§ 1 AStG — Arm's-Length Principle. Section 1 of the AStG provides that where a taxpayer who is resident in Germany, or who has income subject to limited German tax liability, conducts cross-border business transactions with a related party (nahestehende Person), and the conditions agreed upon for such transactions differ from those that would have been agreed upon between unrelated parties dealing at arm's length, th

§ 1a AStG — Financial Transactions (Effective 2024). Effective for fiscal years beginning on or after January 1, 2024, the newly enacted § 1a AStG introduces specific provisions governing the transfer pricing treatment of financial transactions between related parties. Section 1a requires, among other things, that the German tax authorities assess whether the borrower subsidiary would have been able to borrow the rel

§ 90 Abs. 3 AO — Contemporaneous Documentation Requirement. Section 90, subsection 3, of the AO imposes a mandatory transfer pricing documentation requirement on taxpayers who engage in cross-border related-party transactions. The documentation must describe the nature and terms of the transaction, the functions performed, assets used, and risks assumed by each party, the comparability analysis, the selection and app

§ 4h EStG / § 8a KStG — Zinsschranke (Interest Barrier Rule). The German interest barrier rule limits the deductibility of net interest expense (i.e., total interest expense less total interest income) to 30% of the taxpayer's tax-EBITDA (earnings before interest, taxes, depreciation, and amortization, as computed for tax purposes). Any net interest expense in excess of the 30% limit is not deductible in the current

IV. Arm's-Length Interest Rate Benchmark Analysis A. Methodology The arm's-length interest rate for any intercompany on-lending from IHDC to IHDC Frankfurt is determined using the Comparable Uncontrolled Price ("CUP") method as the primary transfer pricing method. The CUP method compares the terms of the controlled intercompany transaction to the terms of a comparable uncontrolled transaction — that is, a transaction

V. Documentation Requirements A. German Transfer Pricing Documentation (§ 90 Abs. 3 AO) IHDC Frankfurt is required to prepare and maintain contemporaneous transfer pricing documentation covering all cross-border related-party transactions, in accordance with § 90 Abs. 3 AO and the BMF circular of June 14, 2021. The documentation must consist of three components, as described below. Master File. The Master File provid