1032-00003 · Client 1032 · Structuring & Analysis/Tax

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MEMORANDUM

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT

FROM: Leonard Cross, Partner, Tax Group, Calderwood & Harkness LLP

TO: Vivienne St. Claire, Partner, Capital Markets Robert Adeyemi, Partner, Capital Markets Claire Dempsey, Lead Associate, Capital Markets Audrey Zhou, Working Associate, Capital Markets

DATE: January 31, 2026

RE: Halcyon Semiconductor AG — US/German Tax Treaty Implications for Holders of American Depositary Shares

MATTER NO.: 1032-00003

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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") for United States persons who acquire, hold, and dispose of American Depositary Shares ("ADSs") to be issued by Meridian Trust Company, National Association ("Meridian Trust"), as depositary, each ADS representing two (2) ordinary shares (Stammaktien) of Halcyon Semiconductor Aktiengesellschaft ("Halcyon," "HSAG," or the "Company"), a German stock corporation (Aktiengesellschaft) incorporated and registered in Munich, Bavaria, Federal Republic of Germany (Commercial Register No. HRB 217458, Amtsgericht München).

The ADSs will be listed on the Nasdaq Global Select Market under the ticker symbol "HCYN." Halcyon's ordinary shares currently trade on the Frankfurt Stock Exchange (Frankfurter Wertpapierbörse) under the symbol FRA: HCY, Prime Standard segment. The ADSs are being registered under a Form F-1 Registration Statement filed under the Securities Act of 1933, as amended (the "Securities Act"), in connection with a Level III American Depositary Receipt program (the "Offering").

This memorandum has been prepared for three principal purposes: (a) to inform the drafting of the taxation section of the Form F-1 Registration Statement (including both the "Material Tax Considerations" discussion in the prospectus body and the related risk factor disclosure); (b) to guide the structuring of the depositary and custodian arrangements between Meridian Trust, its German sub-custodian, and the Company, particularly as they relate to treaty-rate withholding mechanics; and (c) to serve as a reference document for the Capital Markets deal team as it coordinates with German counsel (Bähr Stein Rechtsanwälte) on cross-border tax matters arising in connection with the Offering.

Summary of Key Conclusions. The following key conclusions are discussed in detail throughout this memorandum:

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 directly hold at least 10% of the voting stock.

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), and holders who have the full statutory rate withheld should seek a refund of the excess from the German Federal Central Tax Office (Bundeszentralamt für Steuern, or "BZSt") to preserve the creditability of the remainder.

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 coordination with Meridian Trust and Bähr Stein Rechtsanwälte.

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 matter number and is available upon request.

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 the design, development, and manufacture of silicon carbide ("SiC") and gallium nitride ("GaN") chips for the automotive, industrial automation, and renewable energy sectors.

Halcyon was founded in 1997 and has grown to employ approximately 8,400 individuals worldwide across its design centers, fabrication facilities, and sales offices in Germany, the United States, China, Japan, South Korea, and other markets. The Company maintains fabrication facilities in Munich and Dresden, Germany, as well as a back-end assembly and test facility in Penang, Malaysia.

The Company's financial performance for the fiscal year ended December 31, 2025 (unaudited, as reported to the deal team by the Company's finance department) is summarized as follows:

• FY2025 Revenue: €3.82 billion

• FY2025 EBITDA: €1.07 billion (28.0% margin)

• FY2025 Net Income: €612 million

• Market Capitalization (as of January 10, 2026): approximately €8.6 billion

As of the date of this memorandum, Halcyon has 215,000,000 ordinary shares (Stammaktien) outstanding, each without par value (Stückaktien), which are admitted to trading on the regulated market (regulierter Markt) of the Frankfurt Stock Exchange, Prime Standard segment. The Company's Legal Entity Identifier ("LEI") is 5299007KBTVZ3XQHGL48.

B. The Offering

The Offering contemplates a Level III ADR program, with the ADSs being registered on Form F-1 under the Securities Act. Each ADS will represent two (2) ordinary shares of the Company. The key parameters of the Offering are as follows:

ADS Ratio: 1 ADS = 2 ordinary shares (Stammaktien)

Target Gross Proceeds: $900,000,000 (base deal, before exercise of any overallotment option)

Primary Component: The Company will issue 30,000,000 new ordinary shares, represented by 15,000,000 ADSs, generating estimated gross proceeds to the Company of approximately $630,000,000 (based on the midpoint of the indicative price range described below).

Secondary Component: The following selling shareholders will offer existing ordinary shares in the Offering:

• Rheintal Industrieholding GmbH will sell 8,500,000 ordinary shares, represented by 4,250,000 ADSs; and

• Kestrel Capital Partners AG will sell 4,300,000 ordinary shares, represented by 2,150,000 ADSs.

The total secondary component comprises 12,800,000 ordinary shares represented by 6,400,000 ADSs, generating estimated gross proceeds to the selling shareholders of approximately $270,000,000 (based on the midpoint of the indicative price range).

Total Base Deal: 21,400,000 ADSs (representing 42,800,000 ordinary shares).

Overallotment Option: The underwriters will be granted an option, exercisable within 30 days of the closing of the Offering, to purchase up to 3,210,000 additional ADSs (representing 15% of the base deal), solely to cover overallotments.

ADS Price Range: $39.00 to $45.00 per ADS (implied midpoint of approximately $42.00, with pricing to be determined based on market conditions and investor indications of interest at the time of pricing).

Post-IPO Shares Outstanding: Following the issuance of the 30,000,000 new ordinary shares in the primary component, the Company will have 245,000,000 ordinary shares outstanding (215,000,000 pre-IPO shares plus 30,000,000 new shares). The secondary component does not increase total shares outstanding.

C. Depositary and Custodian Arrangements

The depositary arrangements for the ADSs are being structured as follows:

Depositary: Meridian Trust Company, National Association, a national banking association organized under the laws of the United States, with its principal office at 101 Barclay Street, New York, New York 10286. The primary contact for depositary receipt matters is Patricia Novak, Vice President, Depositary Receipts.

Transfer Agent and Registrar for ADSs: Crestfield Transfer Services Inc., located at 6201 15th Avenue, Brooklyn, New York 11219. The primary contact is Angela Moretti, Director, Corporate Actions. Crestfield will maintain the ADS register and process transfers, cancellations, and issuances of ADSs in accordance with the Deposit Agreement.

German Sub-Custodian: The ordinary shares underlying the ADSs will be held in Germany through a German sub-custodian designated by Meridian Trust. Settlement of ordinary shares will occur through Ashgrove Enterprises Banking AG, the German central securities depository. The identity of the German sub-custodian has not yet been confirmed by Meridian Trust as of the date of this memorandum, and its identity is relevant to the analysis of treaty-rate withholding mechanics described in Section V below.

Depositary Fee: ADS holders will be charged a depositary fee of $0.05 per ADS per annum, payable to Meridian Trust. Additional fees and charges may apply for deposits and withdrawals of ordinary shares, cash distributions, and other depositary services, as set forth in the Deposit Agreement.

Governing Law: The Deposit Agreement between Halcyon, Meridian Trust, and the holders of ADSs will be governed by the laws of the State of Delaware, without regard to principles of conflicts of law.

The specific terms of the Deposit Agreement, including provisions relating to the payment of dividends, voting rights, deposit and withdrawal procedures, and fees, are being separately negotiated by the Capital Markets team. For purposes of this memorandum, we have assumed that the Deposit Agreement will be in substantially customary form for a Level III ADR program and that the depositary's obligations with respect to the withholding and remittance of taxes on dividend distributions will be consistent with market practice.

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 applies both to dividends paid to German-resident shareholders and to dividends paid to non-resident shareholders, although the ultimate tax treatment differs depending on the residence status of the shareholder and the availability of tax treaty relief.

The statutory withholding rate applicable to dividends paid by a German corporation is 25% of the gross dividend amount, as provided by Section 43a(1) EStG. In addition, a solidarity surcharge (Solidaritätszuschlag) is imposed at the rate of 5.5% of the withholding tax itself, yielding an additional charge of 1.375% of the gross dividend (i.e., 5.5% × 25% = 1.375%). The total effective statutory withholding rate applicable to dividends paid to non-resident shareholders is therefore 26.375% (25% + 1.375%).

Church tax (Kirchensteuer), which may apply to German-resident individual taxpayers at rates ranging from 8% to 9% of the income tax depending on the German federal state (Bundesland) and the taxpayer's religious affiliation, is not applicable to non-resident holders. Accordingly, ADS holders who are US residents and are not otherwise subject to German taxation in their personal capacity will not be subject to German church tax on dividends received from Halcyon.

The withholding obligation under German law falls on the dividend-paying entity — in this case, Halcyon — or, in practice, on Halcyon's payment agent or depository bank in Germany (the German sub-custodian acting in the depositary chain). The withholding tax is deducted from the gross dividend at the time of payment and remitted to the German tax authorities (Finanzamt) on behalf of the non-resident shareholder.

It is important to note that for non-resident holders, the German withholding tax on dividends generally has the character of a final tax (Abgeltungsteuer). This means that non-resident holders of Halcyon shares (or ADSs representing such shares) generally have no obligation to file a German income tax return solely by reason of receiving dividend income from Halcyon. The withholding tax represents the full extent of the non-resident holder's German tax liability with respect to such dividend income (subject, of course, to any reduction available under an applicable income tax treaty).

B. Taxable Base

Dividends subject to German withholding tax include cash dividends (Bardividenden), stock dividends (Stockdividenden) to the extent treated as income for German tax purposes (rather than a return of capital), and constructive dividends (verdeckte Gewinnausschüttungen) that may arise in connection with non-arm's-length transactions between the Company and its shareholders.

An important exception to the general withholding tax rule applies to distributions made out of the Company's tax contribution account (steuerliches Einlagekonto), as maintained pursuant to Section 27 of the KStG. Distributions from the steuerliches Einlagekonto represent a return of shareholder contributions to the Company and are generally not treated as taxable dividend income for German tax purposes. To the extent a distribution is properly characterized as a distribution from the steuerliches Einlagekonto, it is not subject to German withholding tax and instead reduces the shareholder's tax basis in the shares. The Company must determine and disclose the extent (if any) to which a given distribution is made from the steuerliches Einlagekonto.

We note that Halcyon's dividend policy and the expected character of any post-IPO distributions — specifically, whether any portion of anticipated distributions would be sourced from the steuerliches Einlagekonto rather than from retained earnings — should be confirmed with Bähr Stein Rechtsanwälte (Dr. Christoph Maurelban, Partner, Tax). This information is relevant both to the prospectus disclosure and to the foreign tax credit analysis for US holders, as a distribution that is treated as a return of capital for German tax purposes may not generate a creditable foreign tax.

C. Withholding Mechanics for ADSs

The mechanics of German withholding tax on dividends paid to holders of ADSs involve a multi-step chain of intermediaries, which is described below:

Step 1: Halcyon declares and pays a dividend on its ordinary shares. The gross dividend is paid in EUR by Halcyon to the registered holders of its ordinary shares or, in the case of shares held in collective custody (Sammelverwahrung) through Ashgrove Enterprises Banking AG, to the account of the custodian holding the shares on behalf of Meridian Trust.

Step 2: The German sub-custodian designated by Meridian Trust withholds German withholding tax at the applicable rate (either the full statutory rate of 26.375% or, if relief at source is available, the reduced treaty rate of 15%) from the gross dividend amount.

Step 3: The net-of-tax dividend proceeds are remitted by the German sub-custodian to Meridian Trust in New York.

Step 4: Meridian Trust converts the net EUR dividend proceeds to US dollars at the prevailing exchange rate and distributes the USD proceeds to ADS holders through the Depository Trust Company ("DTC") and the chain of intermediaries (broker-dealers and custodian banks) that hold ADSs in "street name" on behalf of beneficial owners.

The critical practical question from the perspective of US ADS holders is whether the German withholding tax can be applied at the reduced treaty rate of 15% at source (i.e., at Step 2 in the chain described above) or whether the full statutory rate of 26.375% is withheld at source, with US holders subsequently required to file for a refund of the excess 11.375% from the BZSt. The answer to this question depends on the availability and implementation of the relief-at-source procedure (Freistellungsverfahren) under German law, which is discussed in detail in Section V below.

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 is a company that directly holds at least 10% of the voting stock of the company paying the dividends; or

(b) 15% of the gross amount of the dividends in all other cases.

For the vast majority of US holders who will acquire ADSs in the Offering — including individual investors and institutional investors holding positions that do not represent 10% or more of Halcyon's voting stock — the applicable treaty rate is 15% of the gross dividend amount. This represents a significant reduction from the German statutory rate of 26.375%.

The 5% rate under Article 10(2)(a) may be relevant to large institutional ADS holders — such as US mutual fund complexes, pension funds, or sovereign wealth funds — that could theoretically acquire positions representing 10% or more of Halcyon's voting stock. However, given the ADS structure and the anticipated fragmented ownership pattern following the Offering, the 15% rate under Article 10(2)(b) will be the primary focus of this memorandum and of the prospectus disclosure. Holders that believe they may qualify for the 5% rate should be advised to consult their own tax advisors.

B. Beneficial Ownership Requirement

Treaty benefits under Article 10(2) are available only to the "beneficial owner" of the dividends. The concept of beneficial ownership is a substantive requirement that serves as an anti-abuse mechanism, preventing treaty benefits from being claimed by intermediaries, agents, nominees, or conduit entities that do not have the real economic enjoyment of the dividend income.

ADS holders are generally treated as the beneficial owners of the dividends paid on the underlying ordinary shares for purposes of the US-Germany Treaty, provided that:

(i) the ADS holder is a resident of the United States within the meaning of Articles 1 and 4 of the Treaty (i.e., the holder is subject to US tax on a worldwide basis by reason of citizenship, residence, or place of incorporation, and is not treated as a resident of Germany under the Treaty's tie-breaker provisions);

(ii) the ADS holder is not acting as an agent, nominee, or conduit for another person who is not a US resident; and

(iii) the ADS holder is entitled to the economic benefits of the dividends and has the power to use and enjoy such dividends.

A related question arises with respect to ADSs held through the Depository Trust Company ("DTC") in "street name." In the typical holding structure, the chain of ownership runs from DTC (as the registered holder of the ADSs) through participating broker-dealers and custodian banks to the ultimate beneficial owner. For treaty purposes, the beneficial owner is the ultimate investor — the individual or entity that bears the economic risk of the investment and is entitled to the dividend income — and not DTC, the broker-dealer, or any other intermediary in the chain. This treatment is consistent with the general approach taken by both the IRS and the BZSt in administering treaty benefits for holders of depositary receipts.

It should be noted that certain categories of holders may face additional scrutiny regarding beneficial ownership — including, without limitation, holders that have entered into securities lending arrangements, total return swaps, or other derivative transactions with respect to the ADSs that may shift the economic ownership of the underlying dividends to a counterparty. The prospectus tax disclosure should include appropriate cautionary language regarding these circumstances.

C. Limitation on Benefits (Article 28)

The US-Germany Treaty includes a comprehensive Limitation on Benefits ("LOB") provision in Article 28. The LOB provision is designed to prevent "treaty shopping" — i.e., the use of entities organized in a Contracting State solely to obtain treaty benefits that would not otherwise be available to the ultimate investors or owners of such entities. The LOB provision requires that, in order to claim treaty benefits, a resident of a Contracting State must satisfy one of several objective tests demonstrating a sufficient nexus to that State.

The LOB provision is particularly relevant to corporate and institutional ADS holders. The principal LOB tests that may be satisfied by US holders include the following:

(i) Individual Test. US individual residents automatically satisfy the LOB provision and are entitled to claim treaty benefits, including the reduced 15% withholding rate on dividends.

(ii) Publicly Traded Company Test. A US corporation whose principal class of shares is regularly traded on a recognized stock exchange (including Nasdaq, the NYSE, or other recognized exchanges) generally qualifies under the LOB provision.

(iii) Ownership and Base-Erosion Test. A US corporation or other entity may qualify if (a) more than 50% (by value) of its beneficial interests are owned, directly or indirectly, by residents of the United States (or other qualifying persons), and (b) less than 50% of the entity's gross income is paid or accrued (directly or indirectly) to persons who are not residents of either Contracting State in the form of payments that are deductible for purposes of the entity's domestic tax.

(iv) Active Trade or Business Test. A US entity may qualify if it is engaged in an active trade or business in the United States and the dividends are derived in connection with, or are incidental to, that trade or business, subject to the substantiality requirement.

(v) Derivative Benefits Test. A US entity may qualify if persons who would have been entitled to equivalent or more favorable treaty benefits (had they received the income directly) own a sufficient percentage of the entity.

(vi) Competent Authority Determination. In cases where none of the foregoing tests is satisfied, the US entity may request a favorable determination from the competent authority (the IRS, on the US side) that the entity is entitled to treaty benefits.

ADS holders that cannot satisfy any of the LOB tests set forth in Article 28 are not entitled to the reduced 15% (or 5%) withholding rate under Article 10(2) and will be subject to the full German statutory withholding rate of 26.375% on dividends received from Halcyon.

The prospectus tax disclosure section should contain appropriate cautionary language regarding the LOB provision, including a statement that holders should consult their own tax advisors regarding their ability to satisfy the LOB tests and claim treaty benefits. The disclosure should not provide individualized guidance on LOB qualification, as the analysis is inherently fact-specific.

D. Treaty Rate vs. Statutory Rate — Practical Application

When treaty benefits are properly claimed and applicable, German withholding tax on dividends paid to a qualifying US holder is reduced from 26.375% to 15% (or to 5% for qualifying 10%-or-more corporate holders). The difference of 11.375% (or 21.375%, in the case of the 5% rate) between the statutory rate and the Treaty rate is either:

(a) Not withheld in the first place — if the relief-at-source procedure (Freistellungsverfahren) is available and has been properly implemented, the German sub-custodian withholds only the reduced Treaty rate at the time of dividend payment; or

(b) Withheld at the full statutory rate and subsequently refunded — if relief at source is not available (either because the procedure has not been implemented or because the holder has not provided the required documentation), the full 26.375% is withheld, and the US holder must apply to the BZSt for a refund of the excess amount (11.375% or 21.375%, as applicable).

The practical distinction between these two scenarios has significant cash flow implications for ADS holders. Under scenario (a), ADS holders receive net dividend proceeds reflecting only the 15% Treaty-rate withholding, and no further action is required on their part with respect to German tax. Under scenario (b), ADS holders receive net dividend proceeds reflecting the full 26.375% statutory withholding, and they must affirmatively apply for a refund of the excess — a process that can take six to twelve months or longer, depending on the volume of refund applications being processed by the BZSt and the completeness of the holder's documentation.

The availability of the relief-at-source procedure depends on the operational infrastructure of the depositary and custodian chain, as discussed in Section V below.

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 which they assume primary withholding and reporting responsibilities for US-source payments made to their account holders. The QI framework is principally designed to facilitate the proper application of US withholding tax on payments of US-source income (such as dividends and interest) to non-US persons, but it also serves as an integrated documentation infrastructure for claiming treaty benefits on a cross-border basis.

For German withholding tax purposes, a parallel — though legally distinct — framework exists. Under German domestic law, the relief-at-source procedure (Freistellungsverfahren), governed by Section 50d(2) EStG, permits the reduction of German withholding tax at the time of dividend payment if the depositary or custodian provides appropriate documentation establishing the beneficial owner's entitlement to treaty benefits. In the absence of such documentation, the full statutory rate is withheld, and the beneficial owner must seek a refund from the BZSt under Section 50d(1) EStG.

The role of Meridian Trust Company, N.A. as a US-organized depositary bank is critical to both frameworks. As the depositary for the ADSs, Meridian Trust is the entity through which dividend payments flow from the German custodian chain to the ultimate US beneficial owners. The efficiency and reliability of the treaty-benefit withholding process depends in large part on Meridian Trust's ability to (a) collect and maintain documentation from ADS holders (or their brokers) establishing their entitlement to treaty benefits, and (b) transmit that documentation (or appropriate pooled certifications) to the German sub-custodian in a form that satisfies German legal requirements for relief at source.

B. Meridian Trust's QI Status and German Relief-at-Source

QI Agreement Status. Meridian Trust, as a US-organized national banking association, is not itself a "non-US intermediary" for purposes of the IRS QI program. Rather, Meridian Trust is a US person subject to the withholding and reporting obligations of a US payor under Chapters 3, 4, and 61 of the Code. However, Meridian Trust may hold a QI agreement (or a functionally equivalent arrangement) with the IRS to the extent it acts as an intermediary for payments made to non-US persons through the depositary chain. The current status of any such agreement should be confirmed with Patricia Novak at Meridian Trust.

More directly relevant for the purposes of this memorandum is the question of whether the German sub-custodian designated by Meridian Trust can apply the reduced 15% Treaty rate at source — i.e., at the time of withholding from the gross dividend paid by Halcyon — based on documentation provided through the depositary chain.

German Relief-at-Source Requirements. Under Section 50d(2) EStG, relief at source (i.e., withholding at the reduced Treaty rate rather than the full statutory rate) requires one of the following:

(i) An exemption certificate (Freistellungsbescheinigung) issued by the BZSt upon application by the non-resident beneficial owner or the withholding agent. The exemption certificate authorizes the German paying agent to withhold at the reduced Treaty rate (or to exempt the payment from withholding entirely, if the applicable Treaty provision so provides). The application for an exemption certificate requires the submission of documentation establishing the beneficial owner's treaty eligibility, including a certificate of residence issued by the competent authority of the other Contracting State.

(ii) Compliance with simplified procedures that may be available under certain bilateral administrative arrangements between Germany and the other Contracting State. Germany has entered into simplified relief-at-source arrangements with certain jurisdictions; the availability and terms of any such arrangement with the United States should be confirmed with Bähr Stein.

Practical Challenges. The relief-at-source procedure presents practical challenges in the ADS context because of the large number of beneficial owners whose identities may not be known to the German sub-custodian. In a typical ADS depositary structure, the ADSs are held through DTC in "street name," and the beneficial owners are several layers removed from the German sub-custodian. The German sub-custodian may therefore lack the individualized documentation necessary to apply the reduced Treaty rate at the beneficial-owner level.

To address this challenge, some depositary banks have implemented pooled certification procedures under which the depositary (Meridian Trust, in this case) provides the German sub-custodian with a pooled certificate or declaration regarding the aggregate proportion of ADS holders that are qualifying US residents entitled to treaty benefits. The German sub-custodian then withholds at a blended rate reflecting the proportion of treaty-eligible holders. The specific mechanics and legal permissibility of such pooled certification procedures under German law should be confirmed with Bähr Stein.

C. Practical Mechanics for ADS Holders

Based on the foregoing analysis, two principal scenarios may arise with respect to the withholding of German tax on dividends paid to US holders of ADSs:

Scenario 1 — Relief at Source. If the German sub-custodian and Meridian Trust can implement a relief-at-source procedure that satisfies the requirements of Section 50d(2) EStG, ADS holders who have provided appropriate documentation establishing their US residency and treaty eligibility (either directly or through the depositary chain) would have only 15% withheld from the gross dividend at the time of payment. This is the preferred scenario from the perspective of ADS holders, as it eliminates the need to file refund applications with the BZSt and avoids the cash flow delay associated with the refund process.

Scenario 2 — Withholding and Refund. If relief at source is not available — either because the German sub-custodian and Meridian Trust have not implemented a relief-at-source procedure, because the ADS holder has not provided the required documentation, or because the holder does not satisfy the LOB provision — the full statutory rate of 26.375% will be withheld from the gross dividend. In this case, the US holder must apply to the BZSt for a refund of the excess withholding (i.e., 11.375% of the gross dividend amount, representing the difference between the 26.375% statutory rate and the 15% Treaty rate).

The refund application process is as follows:

• Applications for refund are submitted to the BZSt (address: An der Küppe 1, 53225 Bonn, Germany) using the official BZSt application form, which is currently available in both German and English (Form for Refund of German Withholding Tax on Dividends and Interest for Residents of Countries with which Germany has Concluded a Double Taxation Treaty).

• The processing time for refund applications can be six to twelve months or longer, depending on the volume of applications being processed by the BZSt and the completeness of the documentation submitted. In periods of high volume (such as following a large-cap German IPO or a significant one-time dividend), processing times may be extended.

• Documentary requirements for refund applications include: (a) a certificate of US tax residency issued by the IRS (IRS Form 6166 — Certificate of US Tax Residency); (b) evidence of beneficial ownership of the ADSs (or underlying ordinary shares) at the time the dividend was paid; (c) copies of dividend vouchers or German tax certificates (Steuerbescheinigung) issued by the German paying agent, reflecting the amount of dividend received and the amount of German tax withheld; and (d) for entities, evidence that the LOB provisions of the Treaty are satisfied.

• The refund is paid by the BZSt in EUR by wire transfer to the applicant's designated bank account.

Recommendation. We recommend that Calderwood & Harkness coordinate with Meridian Trust (Patricia Novak) and Bähr Stein Rechtsanwälte (Dr. Christoph Maurelban and Johanna Weiß) to determine the feasibility and timeline for implementing a relief-at-source procedure prior to the first dividend payment following the Offering. If relief at source can be implemented, the prospectus disclosure can describe a streamlined withholding process that will be more favorable to ADS holders. If relief at source is not feasible (or can only be implemented for certain categories of holders), the prospectus must clearly describe the refund procedure, the expected processing time, and the documentation requirements.

D. Coordination with Bähr Stein on German Tax Procedures

In connection with the analysis set forth in this Section V, as well as the broader German tax disclosure in the prospectus, we recommend that Bähr Stein Rechtsanwälte be consulted on the following matters:

(i) The specific relief-at-source procedure (Freistellungsverfahren) available under German law for dividends paid through the ADR depositary chain, including the documentary and procedural requirements applicable to the German sub-custodian.

(ii) The documentation requirements imposed by the BZSt on non-resident dividend recipients seeking treaty-rate withholding or refunds of excess withholding, including any recent changes in BZSt administrative practice.

(iii) Any recent developments in European Court of Justice ("CJEU") case law that may impact the withholding tax procedures applicable to non-resident holders of German shares or depositary receipts, including, without limitation, the CJEU's line of cases addressing discriminatory withholding tax treatment of non-resident investors (e.g., Commission v. Germany, Case C-284/09; Joined Cases C-10/14 to C-14/14 (Miljoen)).

(iv) The interaction between German domestic anti-avoidance rules (including the requirements of Section 50d(3) EStG, which impose additional substance requirements on certain non-resident entities claiming treaty benefits) and the beneficial ownership and LOB analyses described in Section IV above.

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 Identification Number and Certification), or an acceptable substitute form, to their US broker or to Meridian Trust (as applicable). The Form W-9 confirms the holder's status as a US person for federal income tax purposes and provides the holder's taxpayer identification number ("TIN"). While the Form W-9 is primarily relevant for US information reporting and backup withholding purposes (see Section IX below), it also serves as a foundation for the documentation chain that establishes the holder's eligibility for treaty benefits on German-source income.

IRS Forms W-8BEN and W-8BEN-E. These forms are used by non-US persons (individuals and entities, respectively) to certify their foreign status and, if applicable, to claim treaty benefits for US withholding tax purposes. While these forms are not directly relevant to the German withholding tax analysis for US holders, they are part of the integrated QI documentation infrastructure and may be relevant to the extent that Meridian Trust collects and maintains documentation from all ADS holders (US and non-US) for purposes of its withholding and reporting obligations.

IRS Form 6166 (Certificate of US Tax Residency). This form, issued by the IRS upon request, certifies that the applicant is a resident of the United States for purposes of US income tax and is entitled to the benefits of an applicable income tax treaty. IRS Form 6166 is frequently required by the BZSt as part of the refund application process (see Section V.C above) and may also be required for relief-at-source purposes. US holders seeking treaty benefits should be prepared to obtain a Form 6166 from the IRS, which involves submitting Form 8802 (Application for United States Residency Certification) along with the applicable user fee (currently $85 per Form 6166 requested). Processing times for Form 6166 requests are typically four to six weeks, and applications should be submitted sufficiently in advance of the relevant dividend payment date.

B. German Tax Documentation

For Relief at Source. If a relief-at-source procedure is available, the German sub-custodian may require certifications regarding the US residency and beneficial ownership status of ADS holders. These certifications would typically be provided through the depositary chain — i.e., the ultimate beneficial owner provides documentation to its US broker, the broker provides the information (in pooled or individualized form) to Meridian Trust, and Meridian Trust transmits the information to the German sub-custodian. The specific form and content of the required certifications will depend on the relief-at-source procedure implemented and should be confirmed with Bähr Stein.

For Refund Claims. US holders who are unable to obtain relief at source and who wish to claim a refund of excess German withholding tax must submit an application to the BZSt, accompanied by the following documents:

(i) A properly completed BZSt refund application form;

(ii) A certificate of US tax residency (IRS Form 6166) for the relevant calendar year;

(iii) A dividend tax certificate (Steuerbescheinigung) issued by the German paying agent (i.e., the German sub-custodian or Halcyon's payment agent), reflecting the gross dividend amount, the amount of German withholding tax deducted, and the net dividend paid;

(iv) A declaration of beneficial ownership, confirming that the applicant is the beneficial owner of the dividends and is not acting as an agent, nominee, or conduit;

(v) For entities (as opposed to individuals), evidence that the requirements of the LOB provision in Article 28 of the Treaty are satisfied, which may include organizational documents, ownership charts, financial statements, and other supporting materials; and

(vi) Bank account information for the refund payment (typically an IBAN and BIC/SWIFT code for a EUR-denominated account).

C. Timing and Practical Considerations

Several practical considerations should be noted and addressed in the prospectus disclosure:

First, US ADS holders should be advised in the prospectus that treaty benefit claims require affirmative action on the part of the holder. Treaty benefits are not automatically applied; the holder (or its representative) must provide the required documentation and, if necessary, submit a refund application to the BZSt. Failure to take such action will result in the holder bearing the full statutory withholding rate of 26.375%.

Second, holders who hold ADSs in "street name" through US brokers may face additional complexity in claiming treaty benefits. In the street-name holding structure, the beneficial owner's identity and documentation must be transmitted through multiple layers of intermediaries (broker → DTC → Meridian Trust → German sub-custodian), and there is no assurance that all intermediaries in the chain will transmit the required documentation in a timely or complete manner.

Third, the prospectus should note that Halcyon and Meridian Trust cannot guarantee that ADS holders will be able to obtain treaty benefits or that relief-at-source procedures will be available for any particular dividend payment. The ability to obtain treaty benefits depends on each holder's individual circumstances (including US residency status, beneficial ownership, and LOB qualification) and on the operational capabilities of the depositary and custodian chain.

Fourth, holders should be informed that the BZSt refund process may take six to twelve months or longer and that the refund is paid in EUR, subjecting the holder to currency exchange risk during the refund period. Holders should also be aware that the BZSt may request additional documentation or information during the processing of a refund application, which may further delay the refund.

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 owners of the underlying foreign shares for purposes of determining the character, source, and timing of income derived from such shares. Accordingly, dividends received by a US holder through ADSs are treated as dividends received from a foreign corporation (Halcyon), and gains or losses recognized upon the sale, exchange, or other disposition of ADSs are treated as gains or losses from the sale or exchange of the underlying ordinary shares.

The tax treatment of deposits and withdrawals of ordinary shares in exchange for ADSs (and vice versa) is addressed in Section VIII.C below.

B. Taxation of Dividends — Ordinary Income

General Rule. Dividends paid by Halcyon to US holders of ADSs are included in the holder's gross income as ordinary income on the date of receipt by the holder (or, in the case of ADSs held through DTC and intermediaries, the date on which the dividend is constructively received by the depositary on behalf of the ADS holders). The dividends are foreign-source income for purposes of the US foreign tax credit limitation.

Dividends-Received Deduction. Dividends from Halcyon — a non-US corporation — are not eligible for the dividends-received deduction under Section 243 of the Code that is generally available to US corporate shareholders for dividends received from US domestic corporations. This is an important distinction for corporate ADS holders.

Qualified Dividend Income. For individual US holders (and certain other non-corporate holders), dividends from Halcyon may qualify as "qualified dividend income" ("QDI") under Section 1(h)(11) of the Code, which is taxable at preferential long-term capital gains rates (currently 0%, 15%, or 20%, depending on the holder's taxable income level), rather than at ordinary income rates (which can be as high as 37% under current law). To qualify as QDI, the following conditions must be satisfied:

(i) Treaty Eligibility. The dividends must be paid by a corporation that is eligible for the benefits of a comprehensive income tax treaty with the United States that includes an information exchange provision and that the Secretary of the Treasury has determined to be satisfactory for this purpose. The US-Germany Treaty satisfies this requirement, as it includes a comprehensive information exchange provision in Article 26 and has been identified by the IRS as a qualifying treaty for QDI purposes.

(ii) Non-PFIC Status. The paying corporation must not be classified as a PFIC for the taxable year in which the dividend is paid or for the preceding taxable year. As noted above, our preliminary analysis indicates that Halcyon is not a PFIC. A separate detailed PFIC analysis memorandum has been prepared under this matter number.

(iii) Holding Period Requirement. The US holder must satisfy a minimum holding period with respect to the ADSs. Specifically, the holder must have held the ADSs for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date (the first date on which a buyer of the ADSs would not be entitled to receive the dividend). For preferred stock dividends with respect to periods in excess of 366 days, a longer holding period applies, but this is not relevant to Halcyon's ordinary shares.

US holders who satisfy all three conditions will be eligible to have Halcyon's dividends taxed at the preferential QDI rates. Holders who do not satisfy these conditions — for example, holders who have not met the holding period requirement or who hold ADSs as part of certain hedging or straddle transactions — will be taxed on Halcyon's dividends at ordinary income rates.

Net Investment Income Tax. In addition to regular income tax on dividends, certain high-income individuals, estates, and trusts may be subject to the Net Investment Income Tax ("NIIT") under Section 1411 of the Code. The NIIT is imposed at a rate of 3.8% on the lesser of (a) the taxpayer's "net investment income" (which includes dividends, interest, capital gains, and other investment income, less certain deductions) and (b) the excess of the taxpayer's modified adjusted gross income over a threshold amount ($250,000 for married taxpayers filing jointly, $200,000 for single taxpayers). ADS holders who are subject to the NIIT should take this additional tax into account in evaluating their total tax burden on Halcyon dividends.

C. Foreign Currency Considerations

Halcyon declares and pays dividends in EUR. The conversion of EUR dividends to USD occurs through the depositary chain, as described in Section III.C above. For US federal income tax purposes, the following foreign currency rules apply:

Amount of Dividend Income. The amount of dividend income included in a US holder's gross income is determined by the USD value of the EUR dividend on the date of receipt (or, for holders of ADSs held through DTC, the date of constructive receipt by the depositary). If the depositary converts the EUR dividend to USD on a date other than the date of receipt, the holder may recognize foreign currency gain or loss attributable to the difference between the USD value of the EUR dividend on the date of receipt and the USD value on the date of conversion.

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 ADS gives rise to capital gain or loss.

For reference, the EUR/USD exchange rate as of January 10, 2026 was approximately €1.00 = $1.078. This reference rate is provided for illustrative purposes only and should not be relied upon as an indication of future exchange rates.

D. Foreign Tax Credit Implications

General Rule. US holders who pay (or have withheld on their behalf) German withholding tax on dividends received from Halcyon may be eligible to claim a US foreign tax credit under Section 901 of the Code, subject to the limitations of Section 904. The foreign tax credit is intended to prevent double taxation of income that is taxed by both a foreign country and the United States.

Creditability of German Taxes. The German Kapitalertragsteuer (withholding tax on investment income) and Solidaritätszuschlag (solidarity surcharge) are generally regarded by the IRS as creditable income taxes for purposes of Section 901 of the Code. This is consistent with the position taken in published IRS guidance and with the general treatment of German income taxes under the US-Germany Treaty.

Limitation on Credit Amount. The foreign tax credit is subject to the limitation of Section 904, which limits the credit for foreign taxes to the amount of US tax attributable to the taxpayer's foreign-source income in the relevant limitation category. For most US holders, dividends from Halcyon will constitute "passive category income" (for individual holders and most corporate holders) or "general category income" (for certain corporate holders), and the foreign tax credit will be limited to the US tax attributable to such income in the applicable category. Holders with insufficient foreign-source income in the relevant category may not be able to fully utilize their foreign tax credits in the year paid, although excess credits may be carried back one year or carried forward ten years under Section 904(c).

Important Limitation — Excess Withholding. US holders may claim a foreign tax credit only for German taxes that do not exceed the amount properly imposed under the Treaty. Specifically, if the full statutory rate of 26.375% is withheld by the German sub-custodian but the applicable Treaty rate is 15%, the US holder should apply to the BZSt for a refund of the excess 11.375%. The US holder generally may claim a US foreign tax credit only for the 15% Treaty-rate amount — i.e., the amount of German tax that is properly due and not subject to refund.

If the US holder does not seek a refund of the excess withholding from the BZSt, the IRS may challenge the creditability of the excess amount on the ground that it is not a "compulsory" payment within the meaning of Treasury Regulation § 1.901-2(e)(5). Under that regulation, a foreign tax is not considered a compulsory payment to the extent the taxpayer is entitled to a refund or credit from the foreign country but has failed to take reasonable steps to obtain such refund or credit. Accordingly, US holders who are subject to the full statutory rate of German withholding tax are strongly advised to seek a refund of the excess from the BZSt in order to preserve the creditability of the remaining Treaty-rate amount.

Deduction Alternative. As an alternative to claiming a foreign tax credit, US holders may elect to deduct (rather than credit) foreign taxes paid or accrued under Section 164 of the Code. However, a deduction is generally less favorable than a credit, because a deduction reduces taxable income dollar-for-dollar whereas a credit reduces the US tax liability dollar-for-dollar. The election to credit or deduct foreign taxes is made on an annual basis and applies to all foreign taxes paid or accrued by the taxpayer during the taxable year.

Corporate Holders — Basket Analysis. For corporate holders of ADSs, the foreign tax credit analysis requires careful attention to the Section 904 separate limitation categories. Dividends from Halcyon will generally fall in the "passive category" for most corporate holders, unless the corporate holder is a financial services entity (in which case the income may fall in the "general category") or otherwise qualifies for a different categorization. The allocation and apportionment of expenses (including interest expense) to foreign-source income categories can significantly affect the amount of foreign tax credit that is usable in a given year.

The prospectus tax disclosure should note these complexities and recommend that US holders consult their own tax advisors regarding the availability, amount, and limitations of the US foreign tax credit with respect to German withholding taxes on Halcyon dividends.

E. PFIC Considerations — Cross-Reference

If Halcyon were classified as a passive foreign investment company ("PFIC") within the meaning of Section 1297 of the Code for any taxable year during which a US holder holds ADSs, the US holder would face significantly adverse tax consequences, including the following:

(i) Excess Distribution Regime. Under Section 1291 of the Code, "excess distributions" (including certain gains on the disposition of PFIC stock) would be subject to a special tax regime under which the excess distribution is allocated ratably over the holder's holding period, the portion allocated to the current year (and any year before the company became a PFIC) is taxed as ordinary income, and the portions allocated to prior PFIC years are taxed at the highest rate in effect for those years, plus an interest charge on the deemed deferred tax.

(ii) Loss of QDI Treatment. Dividends from a PFIC are not eligible for treatment as qualified dividend income and would be taxed at ordinary income rates.

(iii) Mark-to-Market or QEF Elections. A US holder may be able to mitigate the adverse PFIC consequences by making a timely "mark-to-market" election under Section 1296 (available if the ADSs are "marketable stock" regularly traded on a qualified exchange) or a "qualified electing fund" ("QEF") election under Section 1295 (which requires annual information from the PFIC). Each election has its own requirements and consequences.

As noted in Section I, a separate detailed PFIC analysis memorandum has been prepared by the undersigned under this matter number. The conclusion of that analysis is that Halcyon is not expected to be classified as a PFIC for its taxable year ending December 31, 2025 or for the foreseeable future. Specifically, Halcyon satisfies the active business exception: less than 25% of its gross income is passive income (the "income test"), and less than 50% of the average fair market value (or adjusted tax basis, if elected) of its assets produce, or are held for the production of, passive income (the "asset test"). The Company's revenue is overwhelmingly derived from the design, manufacture, and sale of SiC and GaN semiconductor devices, and its asset base consists principally of fabrication facilities, equipment, intellectual property, and working capital employed in active business operations.

Notwithstanding this favorable conclusion, the prospectus will contain a risk factor and detailed PFIC disclosure in the taxation section. This is appropriate because PFIC status is a factual determination that must be made on an annual basis and is subject to change based on the Company's income, assets, and activities in future years. The prospectus should include cautionary language to the effect that there can be no assurance that the Company will not be classified as a PFIC in the current or any future taxable year, that the IRS could challenge the Company's PFIC classification, and that US holders should consult their own tax advisors regarding the potential PFIC consequences of holding ADSs.

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 ADSs acquired in the Offering will generally be equal to the purchase price paid for the ADSs (including any underwriting discounts or brokerage commissions treated as part of the cost of the ADSs).

If the ADSs have been held for more than one year at the time of disposition, the resulting capital gain or loss is long-term capital gain or loss. For individual US holders, long-term capital gains are currently taxable at preferential rates of 0%, 15%, or 20%, depending on the holder's taxable income level. Short-term capital gains (from ADSs held for one year or less) are taxed at ordinary income rates. Corporate holders are generally taxed on capital gains at the same rate as ordinary income.

The deductibility of capital losses is subject to limitations under the Code. For individual holders, capital losses may be deducted against capital gains plus up to $3,000 of ordinary income per year, with any excess capital losses carried forward to future years. For corporate holders, capital losses may be deducted only against capital gains.

The NIIT of 3.8% described in Section VII.B above may also apply to net capital gains recognized by high-income individual holders upon the disposition of ADSs.

B. Source of Gain

Under the Internal Revenue Code, gain from the sale of stock (or ADSs representing stock) by a US holder is generally treated as US-source income under Section 865(a) of the Code. This sourcing rule has important implications for the foreign tax credit analysis: because the gain is US-source, a US holder who is subject to any foreign tax on such gain may not be able to credit that foreign tax against US tax on the gain (because the foreign tax credit is generally limited to US tax attributable to foreign-source income).

As a practical matter, Germany generally does not impose tax on capital gains recognized by non-resident holders on the sale of shares in a German corporation, except in the limited circumstance described below. Under German domestic law, capital gains from the alienation of shares in a German corporation by a non-resident

MEMORANDUM
PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT
FROM: Leonard Cross, Partner, Tax Group, Calderwood & Harkness LLP
TO: Vivienne St. Claire, Partner, Capital Markets Robert Adeyemi, Partner, Capital Markets Claire Dempsey, Lead Associate, Capital Markets Audrey Zhou, Working Associate, Capital Markets
DATE: January 31, 2026
RE: Halcyon Semiconductor AG — US/German Tax Treaty Implications for Holders of American Depositary Shares
MATTER NO.: 1032-00003
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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") for United States persons who acquire, hold, and dispose of American Depositary Shares ("ADSs") to be issued by Meridian Trust Company, National Association ("Meridian Trust"), as depositary, each ADS representing two (2) ordinary shares (Stammaktien) of Halcyon Semiconductor Aktiengesellschaft ("Halcyon," "HSAG," or the "Company"), a German stock corporation (Aktiengesellschaft) incorporated and registered in Munich, Bavaria, Federal Republic of Germany (Commercial Register No. HRB 217458, Amtsgericht München).
The ADSs will be listed on the Nasdaq Global Select Market under the ticker symbol "HCYN." Halcyon's ordinary shares currently trade on the Frankfurt Stock Exchange (Frankfurter Wertpapierbörse) under the symbol FRA: HCY, Prime Standard segment. The ADSs are being registered under a Form F-1 Registration Statement filed under the Securities Act of 1933, as amended (the "Securities Act"), in connection with a Level III American Depositary Receipt program (the "Offering").
This memorandum has been prepared for three principal purposes: (a) to inform the drafting of the taxation section of the Form F-1 Registration Statement (including both the "Material Tax Considerations" discussion in the prospectus body and the related risk factor disclosure); (b) to guide the structuring of the depositary and custodian arrangements between Meridian Trust, its German sub-custodian, and the Company, particularly as they relate to treaty-rate withholding mechanics; and (c) to serve as a reference document for the Capital Markets deal team as it coordinates with German counsel (Bähr Stein Rechtsanwälte) on cross-border tax matters arising in connection with the Offering.
Summary of Key Conclusions. The following key conclusions are discussed in detail throughout this memorandum:
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 directly hold at least 10% of the voting stock.
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), and holders who have the full statutory rate withheld should seek a refund of the excess from the German Federal Central Tax Office (Bundeszentralamt für Steuern, or "BZSt") to preserve the creditability of the remainder.
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 coordination with Meridian Trust and Bähr Stein Rechtsanwälte.
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 matter number and is available upon request.
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 the design, development, and manufacture of silicon carbide ("SiC") and gallium nitride ("GaN") chips for the automotive, industrial automation, and renewable energy sectors.
Halcyon was founded in 1997 and has grown to employ approximately 8,400 individuals worldwide across its design centers, fabrication facilities, and sales offices in Germany, the United States, China, Japan, South Korea, and other markets. The Company maintains fabrication facilities in Munich and Dresden, Germany, as well as a back-end assembly and test facility in Penang, Malaysia.
The Company's financial performance for the fiscal year ended December 31, 2025 (unaudited, as reported to the deal team by the Company's finance department) is summarized as follows:
• FY2025 Revenue: €3.82 billion
• FY2025 EBITDA: €1.07 billion (28.0% margin)
• FY2025 Net Income: €612 million
• Market Capitalization (as of January 10, 2026): approximately €8.6 billion
As of the date of this memorandum, Halcyon has 215,000,000 ordinary shares (Stammaktien) outstanding, each without par value (Stückaktien), which are admitted to trading on the regulated market (regulierter Markt) of the Frankfurt Stock Exchange, Prime Standard segment. The Company's Legal Entity Identifier ("LEI") is 5299007KBTVZ3XQHGL48.
B. The Offering
The Offering contemplates a Level III ADR program, with the ADSs being registered on Form F-1 under the Securities Act. Each ADS will represent two (2) ordinary shares of the Company. The key parameters of the Offering are as follows:
ADS Ratio: 1 ADS = 2 ordinary shares (Stammaktien)
Target Gross Proceeds: $900,000,000 (base deal, before exercise of any overallotment option)
Primary Component: The Company will issue 30,000,000 new ordinary shares, represented by 15,000,000 ADSs, generating estimated gross proceeds to the Company of approximately $630,000,000 (based on the midpoint of the indicative price range described below).
Secondary Component: The following selling shareholders will offer existing ordinary shares in the Offering:
• Rheintal Industrieholding GmbH will sell 8,500,000 ordinary shares, represented by 4,250,000 ADSs; and
• Kestrel Capital Partners AG will sell 4,300,000 ordinary shares, represented by 2,150,000 ADSs.
The total secondary component comprises 12,800,000 ordinary shares represented by 6,400,000 ADSs, generating estimated gross proceeds to the selling shareholders of approximately $270,000,000 (based on the midpoint of the indicative price range).
Total Base Deal: 21,400,000 ADSs (representing 42,800,000 ordinary shares).
Overallotment Option: The underwriters will be granted an option, exercisable within 30 days of the closing of the Offering, to purchase up to 3,210,000 additional ADSs (representing 15% of the base deal), solely to cover overallotments.
ADS Price Range: $39.00 to $45.00 per ADS (implied midpoint of approximately $42.00, with pricing to be determined based on market conditions and investor indications of interest at the time of pricing).
Post-IPO Shares Outstanding: Following the issuance of the 30,000,000 new ordinary shares in the primary component, the Company will have 245,000,000 ordinary shares outstanding (215,000,000 pre-IPO shares plus 30,000,000 new shares). The secondary component does not increase total shares outstanding.
C. Depositary and Custodian Arrangements
The depositary arrangements for the ADSs are being structured as follows:
Depositary: Meridian Trust Company, National Association, a national banking association organized under the laws of the United States, with its principal office at 101 Barclay Street, New York, New York 10286. The primary contact for depositary receipt matters is Patricia Novak, Vice President, Depositary Receipts.
Transfer Agent and Registrar for ADSs: Crestfield Transfer Services Inc., located at 6201 15th Avenue, Brooklyn, New York 11219. The primary contact is Angela Moretti, Director, Corporate Actions. Crestfield will maintain the ADS register and process transfers, cancellations, and issuances of ADSs in accordance with the Deposit Agreement.
German Sub-Custodian: The ordinary shares underlying the ADSs will be held in Germany through a German sub-custodian designated by Meridian Trust. Settlement of ordinary shares will occur through Ashgrove Enterprises Banking AG, the German central securities depository. The identity of the German sub-custodian has not yet been confirmed by Meridian Trust as of the date of this memorandum, and its identity is relevant to the analysis of treaty-rate withholding mechanics described in Section V below.
Depositary Fee: ADS holders will be charged a depositary fee of $0.05 per ADS per annum, payable to Meridian Trust. Additional fees and charges may apply for deposits and withdrawals of ordinary shares, cash distributions, and other depositary services, as set forth in the Deposit Agreement.
Governing Law: The Deposit Agreement between Halcyon, Meridian Trust, and the holders of ADSs will be governed by the laws of the State of Delaware, without regard to principles of conflicts of law.
The specific terms of the Deposit Agreement, including provisions relating to the payment of dividends, voting rights, deposit and withdrawal procedures, and fees, are being separately negotiated by the Capital Markets team. For purposes of this memorandum, we have assumed that the Deposit Agreement will be in substantially customary form for a Level III ADR program and that the depositary's obligations with respect to the withholding and remittance of taxes on dividend distributions will be consistent with market practice.
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 applies both to dividends paid to German-resident shareholders and to dividends paid to non-resident shareholders, although the ultimate tax treatment differs depending on the residence status of the shareholder and the availability of tax treaty relief.
The statutory withholding rate applicable to dividends paid by a German corporation is 25% of the gross dividend amount, as provided by Section 43a(1) EStG. In addition, a solidarity surcharge (Solidaritätszuschlag) is imposed at the rate of 5.5% of the withholding tax itself, yielding an additional charge of 1.375% of the gross dividend (i.e., 5.5% × 25% = 1.375%). The total effective statutory withholding rate applicable to dividends paid to non-resident shareholders is therefore 26.375% (25% + 1.375%).
Church tax (Kirchensteuer), which may apply to German-resident individual taxpayers at rates ranging from 8% to 9% of the income tax depending on the German federal state (Bundesland) and the taxpayer's religious affiliation, is not applicable to non-resident holders. Accordingly, ADS holders who are US residents and are not otherwise subject to German taxation in their personal capacity will not be subject to German church tax on dividends received from Halcyon.
The withholding obligation under German law falls on the dividend-paying entity — in this case, Halcyon — or, in practice, on Halcyon's payment agent or depository bank in Germany (the German sub-custodian acting in the depositary chain). The withholding tax is deducted from the gross dividend at the time of payment and remitted to the German tax authorities (Finanzamt) on behalf of the non-resident shareholder.
It is important to note that for non-resident holders, the German withholding tax on dividends generally has the character of a final tax (Abgeltungsteuer). This means that non-resident holders of Halcyon shares (or ADSs representing such shares) generally have no obligation to file a German income tax return solely by reason of receiving dividend income from Halcyon. The withholding tax represents the full extent of the non-resident holder's German tax liability with respect to such dividend income (subject, of course, to any reduction available under an applicable income tax treaty).
B. Taxable Base
Dividends subject to German withholding tax include cash dividends (Bardividenden), stock dividends (Stockdividenden) to the extent treated as income for German tax purposes (rather than a return of capital), and constructive dividends (verdeckte Gewinnausschüttungen) that may arise in connection with non-arm's-length transactions between the Company and its shareholders.
An important exception to the general withholding tax rule applies to distributions made out of the Company's tax contribution account (steuerliches Einlagekonto), as maintained pursuant to Section 27 of the KStG. Distributions from the steuerliches Einlagekonto represent a return of shareholder contributions to the Company and are generally not treated as taxable dividend income for German tax purposes. To the extent a distribution is properly characterized as a distribution from the steuerliches Einlagekonto, it is not subject to German withholding tax and instead reduces the shareholder's tax basis in the shares. The Company must determine and disclose the extent (if any) to which a given distribution is made from the steuerliches Einlagekonto.
We note that Halcyon's dividend policy and the expected character of any post-IPO distributions — specifically, whether any portion of anticipated distributions would be sourced from the steuerliches Einlagekonto rather than from retained earnings — should be confirmed with Bähr Stein Rechtsanwälte (Dr. Christoph Maurelban, Partner, Tax). This information is relevant both to the prospectus disclosure and to the foreign tax credit analysis for US holders, as a distribution that is treated as a return of capital for German tax purposes may not generate a creditable foreign tax.
C. Withholding Mechanics for ADSs
The mechanics of German withholding tax on dividends paid to holders of ADSs involve a multi-step chain of intermediaries, which is described below:
Step 1: Halcyon declares and pays a dividend on its ordinary shares. The gross dividend is paid in EUR by Halcyon to the registered holders of its ordinary shares or, in the case of shares held in collective custody (Sammelverwahrung) through Ashgrove Enterprises Banking AG, to the account of the custodian holding the shares on behalf of Meridian Trust.
Step 2: The German sub-custodian designated by Meridian Trust withholds German withholding tax at the applicable rate (either the full statutory rate of 26.375% or, if relief at source is available, the reduced treaty rate of 15%) from the gross dividend amount.
Step 3: The net-of-tax dividend proceeds are remitted by the German sub-custodian to Meridian Trust in New York.
Step 4: Meridian Trust converts the net EUR dividend proceeds to US dollars at the prevailing exchange rate and distributes the USD proceeds to ADS holders through the Depository Trust Company ("DTC") and the chain of intermediaries (broker-dealers and custodian banks) that hold ADSs in "street name" on behalf of beneficial owners.
The critical practical question from the perspective of US ADS holders is whether the German withholding tax can be applied at the reduced treaty rate of 15% at source (i.e., at Step 2 in the chain described above) or whether the full statutory rate of 26.375% is withheld at source, with US holders subsequently required to file for a refund of the excess 11.375% from the BZSt. The answer to this question depends on the availability and implementation of the relief-at-source procedure (Freistellungsverfahren) under German law, which is discussed in detail in Section V below.
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 is a company that directly holds at least 10% of the voting stock of the company paying the dividends; or
(b) 15% of the gross amount of the dividends in all other cases.
For the vast majority of US holders who will acquire ADSs in the Offering — including individual investors and institutional investors holding positions that do not represent 10% or more of Halcyon's voting stock — the applicable treaty rate is 15% of the gross dividend amount. This represents a significant reduction from the German statutory rate of 26.375%.
The 5% rate under Article 10(2)(a) may be relevant to large institutional ADS holders — such as US mutual fund complexes, pension funds, or sovereign wealth funds — that could theoretically acquire positions representing 10% or more of Halcyon's voting stock. However, given the ADS structure and the anticipated fragmented ownership pattern following the Offering, the 15% rate under Article 10(2)(b) will be the primary focus of this memorandum and of the prospectus disclosure. Holders that believe they may qualify for the 5% rate should be advised to consult their own tax advisors.
B. Beneficial Ownership Requirement
Treaty benefits under Article 10(2) are available only to the "beneficial owner" of the dividends. The concept of beneficial ownership is a substantive requirement that serves as an anti-abuse mechanism, preventing treaty benefits from being claimed by intermediaries, agents, nominees, or conduit entities that do not have the real economic enjoyment of the dividend income.
ADS holders are generally treated as the beneficial owners of the dividends paid on the underlying ordinary shares for purposes of the US-Germany Treaty, provided that:
(i) the ADS holder is a resident of the United States within the meaning of Articles 1 and 4 of the Treaty (i.e., the holder is subject to US tax on a worldwide basis by reason of citizenship, residence, or place of incorporation, and is not treated as a resident of Germany under the Treaty's tie-breaker provisions);
(ii) the ADS holder is not acting as an agent, nominee, or conduit for another person who is not a US resident; and
(iii) the ADS holder is entitled to the economic benefits of the dividends and has the power to use and enjoy such dividends.
A related question arises with respect to ADSs held through the Depository Trust Company ("DTC") in "street name." In the typical holding structure, the chain of ownership runs from DTC (as the registered holder of the ADSs) through participating broker-dealers and custodian banks to the ultimate beneficial owner. For treaty purposes, the beneficial owner is the ultimate investor — the individual or entity that bears the economic risk of the investment and is entitled to the dividend income — and not DTC, the broker-dealer, or any other intermediary in the chain. This treatment is consistent with the general approach taken by both the IRS and the BZSt in administering treaty benefits for holders of depositary receipts.
It should be noted that certain categories of holders may face additional scrutiny regarding beneficial ownership — including, without limitation, holders that have entered into securities lending arrangements, total return swaps, or other derivative transactions with respect to the ADSs that may shift the economic ownership of the underlying dividends to a counterparty. The prospectus tax disclosure should include appropriate cautionary language regarding these circumstances.
C. Limitation on Benefits (Article 28)
The US-Germany Treaty includes a comprehensive Limitation on Benefits ("LOB") provision in Article 28. The LOB provision is designed to prevent "treaty shopping" — i.e., the use of entities organized in a Contracting State solely to obtain treaty benefits that would not otherwise be available to the ultimate investors or owners of such entities. The LOB provision requires that, in order to claim treaty benefits, a resident of a Contracting State must satisfy one of several objective tests demonstrating a sufficient nexus to that State.
The LOB provision is particularly relevant to corporate and institutional ADS holders. The principal LOB tests that may be satisfied by US holders include the following:
(i) Individual Test. US individual residents automatically satisfy the LOB provision and are entitled to claim treaty benefits, including the reduced 15% withholding rate on dividends.
(ii) Publicly Traded Company Test. A US corporation whose principal class of shares is regularly traded on a recognized stock exchange (including Nasdaq, the NYSE, or other recognized exchanges) generally qualifies under the LOB provision.
(iii) Ownership and Base-Erosion Test. A US corporation or other entity may qualify if (a) more than 50% (by value) of its beneficial interests are owned, directly or indirectly, by residents of the United States (or other qualifying persons), and (b) less than 50% of the entity's gross income is paid or accrued (directly or indirectly) to persons who are not residents of either Contracting State in the form of payments that are deductible for purposes of the entity's domestic tax.
(iv) Active Trade or Business Test. A US entity may qualify if it is engaged in an active trade or business in the United States and the dividends are derived in connection with, or are incidental to, that trade or business, subject to the substantiality requirement.
(v) Derivative Benefits Test. A US entity may qualify if persons who would have been entitled to equivalent or more favorable treaty benefits (had they received the income directly) own a sufficient percentage of the entity.
(vi) Competent Authority Determination. In cases where none of the foregoing tests is satisfied, the US entity may request a favorable determination from the competent authority (the IRS, on the US side) that the entity is entitled to treaty benefits.
ADS holders that cannot satisfy any of the LOB tests set forth in Article 28 are not entitled to the reduced 15% (or 5%) withholding rate under Article 10(2) and will be subject to the full German statutory withholding rate of 26.375% on dividends received from Halcyon.
The prospectus tax disclosure section should contain appropriate cautionary language regarding the LOB provision, including a statement that holders should consult their own tax advisors regarding their ability to satisfy the LOB tests and claim treaty benefits. The disclosure should not provide individualized guidance on LOB qualification, as the analysis is inherently fact-specific.
D. Treaty Rate vs. Statutory Rate — Practical Application
When treaty benefits are properly claimed and applicable, German withholding tax on dividends paid to a qualifying US holder is reduced from 26.375% to 15% (or to 5% for qualifying 10%-or-more corporate holders). The difference of 11.375% (or 21.375%, in the case of the 5% rate) between the statutory rate and the Treaty rate is either:
(a) Not withheld in the first place — if the relief-at-source procedure (Freistellungsverfahren) is available and has been properly implemented, the German sub-custodian withholds only the reduced Treaty rate at the time of dividend payment; or
(b) Withheld at the full statutory rate and subsequently refunded — if relief at source is not available (either because the procedure has not been implemented or because the holder has not provided the required documentation), the full 26.375% is withheld, and the US holder must apply to the BZSt for a refund of the excess amount (11.375% or 21.375%, as applicable).
The practical distinction between these two scenarios has significant cash flow implications for ADS holders. Under scenario (a), ADS holders receive net dividend proceeds reflecting only the 15% Treaty-rate withholding, and no further action is required on their part with respect to German tax. Under scenario (b), ADS holders receive net dividend proceeds reflecting the full 26.375% statutory withholding, and they must affirmatively apply for a refund of the excess — a process that can take six to twelve months or longer, depending on the volume of refund applications being processed by the BZSt and the completeness of the holder's documentation.
The availability of the relief-at-source procedure depends on the operational infrastructure of the depositary and custodian chain, as discussed in Section V below.
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 which they assume primary withholding and reporting responsibilities for US-source payments made to their account holders. The QI framework is principally designed to facilitate the proper application of US withholding tax on payments of US-source income (such as dividends and interest) to non-US persons, but it also serves as an integrated documentation infrastructure for claiming treaty benefits on a cross-border basis.
For German withholding tax purposes, a parallel — though legally distinct — framework exists. Under German domestic law, the relief-at-source procedure (Freistellungsverfahren), governed by Section 50d(2) EStG, permits the reduction of German withholding tax at the time of dividend payment if the depositary or custodian provides appropriate documentation establishing the beneficial owner's entitlement to treaty benefits. In the absence of such documentation, the full statutory rate is withheld, and the beneficial owner must seek a refund from the BZSt under Section 50d(1) EStG.
The role of Meridian Trust Company, N.A. as a US-organized depositary bank is critical to both frameworks. As the depositary for the ADSs, Meridian Trust is the entity through which dividend payments flow from the German custodian chain to the ultimate US beneficial owners. The efficiency and reliability of the treaty-benefit withholding process depends in large part on Meridian Trust's ability to (a) collect and maintain documentation from ADS holders (or their brokers) establishing their entitlement to treaty benefits, and (b) transmit that documentation (or appropriate pooled certifications) to the German sub-custodian in a form that satisfies German legal requirements for relief at source.
B. Meridian Trust's QI Status and German Relief-at-Source
QI Agreement Status. Meridian Trust, as a US-organized national banking association, is not itself a "non-US intermediary" for purposes of the IRS QI program. Rather, Meridian Trust is a US person subject to the withholding and reporting obligations of a US payor under Chapters 3, 4, and 61 of the Code. However, Meridian Trust may hold a QI agreement (or a functionally equivalent arrangement) with the IRS to the extent it acts as an intermediary for payments made to non-US persons through the depositary chain. The current status of any such agreement should be confirmed with Patricia Novak at Meridian Trust.
More directly relevant for the purposes of this memorandum is the question of whether the German sub-custodian designated by Meridian Trust can apply the reduced 15% Treaty rate at source — i.e., at the time of withholding from the gross dividend paid by Halcyon — based on documentation provided through the depositary chain.
German Relief-at-Source Requirements. Under Section 50d(2) EStG, relief at source (i.e., withholding at the reduced Treaty rate rather than the full statutory rate) requires one of the following:
(i) An exemption certificate (Freistellungsbescheinigung) issued by the BZSt upon application by the non-resident beneficial owner or the withholding agent. The exemption certificate authorizes the German paying agent to withhold at the reduced Treaty rate (or to exempt the payment from withholding entirely, if the applicable Treaty provision so provides). The application for an exemption certificate requires the submission of documentation establishing the beneficial owner's treaty eligibility, including a certificate of residence issued by the competent authority of the other Contracting State.
(ii) Compliance with simplified procedures that may be available under certain bilateral administrative arrangements between Germany and the other Contracting State. Germany has entered into simplified relief-at-source arrangements with certain jurisdictions; the availability and terms of any such arrangement with the United States should be confirmed with Bähr Stein.
Practical Challenges. The relief-at-source procedure presents practical challenges in the ADS context because of the large number of beneficial owners whose identities may not be known to the German sub-custodian. In a typical ADS depositary structure, the ADSs are held through DTC in "street name," and the beneficial owners are several layers removed from the German sub-custodian. The German sub-custodian may therefore lack the individualized documentation necessary to apply the reduced Treaty rate at the beneficial-owner level.
To address this challenge, some depositary banks have implemented pooled certification procedures under which the depositary (Meridian Trust, in this case) provides the German sub-custodian with a pooled certificate or declaration regarding the aggregate proportion of ADS holders that are qualifying US residents entitled to treaty benefits. The German sub-custodian then withholds at a blended rate reflecting the proportion of treaty-eligible holders. The specific mechanics and legal permissibility of such pooled certification procedures under German law should be confirmed with Bähr Stein.
C. Practical Mechanics for ADS Holders
Based on the foregoing analysis, two principal scenarios may arise with respect to the withholding of German tax on dividends paid to US holders of ADSs:
Scenario 1 — Relief at Source. If the German sub-custodian and Meridian Trust can implement a relief-at-source procedure that satisfies the requirements of Section 50d(2) EStG, ADS holders who have provided appropriate documentation establishing their US residency and treaty eligibility (either directly or through the depositary chain) would have only 15% withheld from the gross dividend at the time of payment. This is the preferred scenario from the perspective of ADS holders, as it eliminates the need to file refund applications with the BZSt and avoids the cash flow delay associated with the refund process.
Scenario 2 — Withholding and Refund. If relief at source is not available — either because the German sub-custodian and Meridian Trust have not implemented a relief-at-source procedure, because the ADS holder has not provided the required documentation, or because the holder does not satisfy the LOB provision — the full statutory rate of 26.375% will be withheld from the gross dividend. In this case, the US holder must apply to the BZSt for a refund of the excess withholding (i.e., 11.375% of the gross dividend amount, representing the difference between the 26.375% statutory rate and the 15% Treaty rate).
The refund application process is as follows:
• Applications for refund are submitted to the BZSt (address: An der Küppe 1, 53225 Bonn, Germany) using the official BZSt application form, which is currently available in both German and English (Form for Refund of German Withholding Tax on Dividends and Interest for Residents of Countries with which Germany has Concluded a Double Taxation Treaty).
• The processing time for refund applications can be six to twelve months or longer, depending on the volume of applications being processed by the BZSt and the completeness of the documentation submitted. In periods of high volume (such as following a large-cap German IPO or a significant one-time dividend), processing times may be extended.
• Documentary requirements for refund applications include: (a) a certificate of US tax residency issued by the IRS (IRS Form 6166 — Certificate of US Tax Residency); (b) evidence of beneficial ownership of the ADSs (or underlying ordinary shares) at the time the dividend was paid; (c) copies of dividend vouchers or German tax certificates (Steuerbescheinigung) issued by the German paying agent, reflecting the amount of dividend received and the amount of German tax withheld; and (d) for entities, evidence that the LOB provisions of the Treaty are satisfied.
• The refund is paid by the BZSt in EUR by wire transfer to the applicant's designated bank account.
Recommendation. We recommend that Calderwood & Harkness coordinate with Meridian Trust (Patricia Novak) and Bähr Stein Rechtsanwälte (Dr. Christoph Maurelban and Johanna Weiß) to determine the feasibility and timeline for implementing a relief-at-source procedure prior to the first dividend payment following the Offering. If relief at source can be implemented, the prospectus disclosure can describe a streamlined withholding process that will be more favorable to ADS holders. If relief at source is not feasible (or can only be implemented for certain categories of holders), the prospectus must clearly describe the refund procedure, the expected processing time, and the documentation requirements.
D. Coordination with Bähr Stein on German Tax Procedures
In connection with the analysis set forth in this Section V, as well as the broader German tax disclosure in the prospectus, we recommend that Bähr Stein Rechtsanwälte be consulted on the following matters:
(i) The specific relief-at-source procedure (Freistellungsverfahren) available under German law for dividends paid through the ADR depositary chain, including the documentary and procedural requirements applicable to the German sub-custodian.
(ii) The documentation requirements imposed by the BZSt on non-resident dividend recipients seeking treaty-rate withholding or refunds of excess withholding, including any recent changes in BZSt administrative practice.
(iii) Any recent developments in European Court of Justice ("CJEU") case law that may impact the withholding tax procedures applicable to non-resident holders of German shares or depositary receipts, including, without limitation, the CJEU's line of cases addressing discriminatory withholding tax treatment of non-resident investors (e.g., Commission v. Germany, Case C-284/09; Joined Cases C-10/14 to C-14/14 (Miljoen)).
(iv) The interaction between German domestic anti-avoidance rules (including the requirements of Section 50d(3) EStG, which impose additional substance requirements on certain non-resident entities claiming treaty benefits) and the beneficial ownership and LOB analyses described in Section IV above.
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 Identification Number and Certification), or an acceptable substitute form, to their US broker or to Meridian Trust (as applicable). The Form W-9 confirms the holder's status as a US person for federal income tax purposes and provides the holder's taxpayer identification number ("TIN"). While the Form W-9 is primarily relevant for US information reporting and backup withholding purposes (see Section IX below), it also serves as a foundation for the documentation chain that establishes the holder's eligibility for treaty benefits on German-source income.
IRS Forms W-8BEN and W-8BEN-E. These forms are used by non-US persons (individuals and entities, respectively) to certify their foreign status and, if applicable, to claim treaty benefits for US withholding tax purposes. While these forms are not directly relevant to the German withholding tax analysis for US holders, they are part of the integrated QI documentation infrastructure and may be relevant to the extent that Meridian Trust collects and maintains documentation from all ADS holders (US and non-US) for purposes of its withholding and reporting obligations.
IRS Form 6166 (Certificate of US Tax Residency). This form, issued by the IRS upon request, certifies that the applicant is a resident of the United States for purposes of US income tax and is entitled to the benefits of an applicable income tax treaty. IRS Form 6166 is frequently required by the BZSt as part of the refund application process (see Section V.C above) and may also be required for relief-at-source purposes. US holders seeking treaty benefits should be prepared to obtain a Form 6166 from the IRS, which involves submitting Form 8802 (Application for United States Residency Certification) along with the applicable user fee (currently $85 per Form 6166 requested). Processing times for Form 6166 requests are typically four to six weeks, and applications should be submitted sufficiently in advance of the relevant dividend payment date.
B. German Tax Documentation
For Relief at Source. If a relief-at-source procedure is available, the German sub-custodian may require certifications regarding the US residency and beneficial ownership status of ADS holders. These certifications would typically be provided through the depositary chain — i.e., the ultimate beneficial owner provides documentation to its US broker, the broker provides the information (in pooled or individualized form) to Meridian Trust, and Meridian Trust transmits the information to the German sub-custodian. The specific form and content of the required certifications will depend on the relief-at-source procedure implemented and should be confirmed with Bähr Stein.
For Refund Claims. US holders who are unable to obtain relief at source and who wish to claim a refund of excess German withholding tax must submit an application to the BZSt, accompanied by the following documents:
(i) A properly completed BZSt refund application form;
(ii) A certificate of US tax residency (IRS Form 6166) for the relevant calendar year;
(iii) A dividend tax certificate (Steuerbescheinigung) issued by the German paying agent (i.e., the German sub-custodian or Halcyon's payment agent), reflecting the gross dividend amount, the amount of German withholding tax deducted, and the net dividend paid;
(iv) A declaration of beneficial ownership, confirming that the applicant is the beneficial owner of the dividends and is not acting as an agent, nominee, or conduit;
(v) For entities (as opposed to individuals), evidence that the requirements of the LOB provision in Article 28 of the Treaty are satisfied, which may include organizational documents, ownership charts, financial statements, and other supporting materials; and
(vi) Bank account information for the refund payment (typically an IBAN and BIC/SWIFT code for a EUR-denominated account).
C. Timing and Practical Considerations
Several practical considerations should be noted and addressed in the prospectus disclosure:
First, US ADS holders should be advised in the prospectus that treaty benefit claims require affirmative action on the part of the holder. Treaty benefits are not automatically applied; the holder (or its representative) must provide the required documentation and, if necessary, submit a refund application to the BZSt. Failure to take such action will result in the holder bearing the full statutory withholding rate of 26.375%.
Second, holders who hold ADSs in "street name" through US brokers may face additional complexity in claiming treaty benefits. In the street-name holding structure, the beneficial owner's identity and documentation must be transmitted through multiple layers of intermediaries (broker → DTC → Meridian Trust → German sub-custodian), and there is no assurance that all intermediaries in the chain will transmit the required documentation in a timely or complete manner.
Third, the prospectus should note that Halcyon and Meridian Trust cannot guarantee that ADS holders will be able to obtain treaty benefits or that relief-at-source procedures will be available for any particular dividend payment. The ability to obtain treaty benefits depends on each holder's individual circumstances (including US residency status, beneficial ownership, and LOB qualification) and on the operational capabilities of the depositary and custodian chain.
Fourth, holders should be informed that the BZSt refund process may take six to twelve months or longer and that the refund is paid in EUR, subjecting the holder to currency exchange risk during the refund period. Holders should also be aware that the BZSt may request additional documentation or information during the processing of a refund application, which may further delay the refund.
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 owners of the underlying foreign shares for purposes of determining the character, source, and timing of income derived from such shares. Accordingly, dividends received by a US holder through ADSs are treated as dividends received from a foreign corporation (Halcyon), and gains or losses recognized upon the sale, exchange, or other disposition of ADSs are treated as gains or losses from the sale or exchange of the underlying ordinary shares.
The tax treatment of deposits and withdrawals of ordinary shares in exchange for ADSs (and vice versa) is addressed in Section VIII.C below.
B. Taxation of Dividends — Ordinary Income
General Rule. Dividends paid by Halcyon to US holders of ADSs are included in the holder's gross income as ordinary income on the date of receipt by the holder (or, in the case of ADSs held through DTC and intermediaries, the date on which the dividend is constructively received by the depositary on behalf of the ADS holders). The dividends are foreign-source income for purposes of the US foreign tax credit limitation.
Dividends-Received Deduction. Dividends from Halcyon — a non-US corporation — are not eligible for the dividends-received deduction under Section 243 of the Code that is generally available to US corporate shareholders for dividends received from US domestic corporations. This is an important distinction for corporate ADS holders.
Qualified Dividend Income. For individual US holders (and certain other non-corporate holders), dividends from Halcyon may qualify as "qualified dividend income" ("QDI") under Section 1(h)(11) of the Code, which is taxable at preferential long-term capital gains rates (currently 0%, 15%, or 20%, depending on the holder's taxable income level), rather than at ordinary income rates (which can be as high as 37% under current law). To qualify as QDI, the following conditions must be satisfied:
(i) Treaty Eligibility. The dividends must be paid by a corporation that is eligible for the benefits of a comprehensive income tax treaty with the United States that includes an information exchange provision and that the Secretary of the Treasury has determined to be satisfactory for this purpose. The US-Germany Treaty satisfies this requirement, as it includes a comprehensive information exchange provision in Article 26 and has been identified by the IRS as a qualifying treaty for QDI purposes.
(ii) Non-PFIC Status. The paying corporation must not be classified as a PFIC for the taxable year in which the dividend is paid or for the preceding taxable year. As noted above, our preliminary analysis indicates that Halcyon is not a PFIC. A separate detailed PFIC analysis memorandum has been prepared under this matter number.
(iii) Holding Period Requirement. The US holder must satisfy a minimum holding period with respect to the ADSs. Specifically, the holder must have held the ADSs for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date (the first date on which a buyer of the ADSs would not be entitled to receive the dividend). For preferred stock dividends with respect to periods in excess of 366 days, a longer holding period applies, but this is not relevant to Halcyon's ordinary shares.
US holders who satisfy all three conditions will be eligible to have Halcyon's dividends taxed at the preferential QDI rates. Holders who do not satisfy these conditions — for example, holders who have not met the holding period requirement or who hold ADSs as part of certain hedging or straddle transactions — will be taxed on Halcyon's dividends at ordinary income rates.
Net Investment Income Tax. In addition to regular income tax on dividends, certain high-income individuals, estates, and trusts may be subject to the Net Investment Income Tax ("NIIT") under Section 1411 of the Code. The NIIT is imposed at a rate of 3.8% on the lesser of (a) the taxpayer's "net investment income" (which includes dividends, interest, capital gains, and other investment income, less certain deductions) and (b) the excess of the taxpayer's modified adjusted gross income over a threshold amount ($250,000 for married taxpayers filing jointly, $200,000 for single taxpayers). ADS holders who are subject to the NIIT should take this additional tax into account in evaluating their total tax burden on Halcyon dividends.
C. Foreign Currency Considerations
Halcyon declares and pays dividends in EUR. The conversion of EUR dividends to USD occurs through the depositary chain, as described in Section III.C above. For US federal income tax purposes, the following foreign currency rules apply:
Amount of Dividend Income. The amount of dividend income included in a US holder's gross income is determined by the USD value of the EUR dividend on the date of receipt (or, for holders of ADSs held through DTC, the date of constructive receipt by the depositary). If the depositary converts the EUR dividend to USD on a date other than the date of receipt, the holder may recognize foreign currency gain or loss attributable to the difference between the USD value of the EUR dividend on the date of receipt and the USD value on the date of conversion.
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 ADS gives rise to capital gain or loss.
For reference, the EUR/USD exchange rate as of January 10, 2026 was approximately €1.00 = $1.078. This reference rate is provided for illustrative purposes only and should not be relied upon as an indication of future exchange rates.
D. Foreign Tax Credit Implications
General Rule. US holders who pay (or have withheld on their behalf) German withholding tax on dividends received from Halcyon may be eligible to claim a US foreign tax credit under Section 901 of the Code, subject to the limitations of Section 904. The foreign tax credit is intended to prevent double taxation of income that is taxed by both a foreign country and the United States.
Creditability of German Taxes. The German Kapitalertragsteuer (withholding tax on investment income) and Solidaritätszuschlag (solidarity surcharge) are generally regarded by the IRS as creditable income taxes for purposes of Section 901 of the Code. This is consistent with the position taken in published IRS guidance and with the general treatment of German income taxes under the US-Germany Treaty.
Limitation on Credit Amount. The foreign tax credit is subject to the limitation of Section 904, which limits the credit for foreign taxes to the amount of US tax attributable to the taxpayer's foreign-source income in the relevant limitation category. For most US holders, dividends from Halcyon will constitute "passive category income" (for individual holders and most corporate holders) or "general category income" (for certain corporate holders), and the foreign tax credit will be limited to the US tax attributable to such income in the applicable category. Holders with insufficient foreign-source income in the relevant category may not be able to fully utilize their foreign tax credits in the year paid, although excess credits may be carried back one year or carried forward ten years under Section 904(c).
Important Limitation — Excess Withholding. US holders may claim a foreign tax credit only for German taxes that do not exceed the amount properly imposed under the Treaty. Specifically, if the full statutory rate of 26.375% is withheld by the German sub-custodian but the applicable Treaty rate is 15%, the US holder should apply to the BZSt for a refund of the excess 11.375%. The US holder generally may claim a US foreign tax credit only for the 15% Treaty-rate amount — i.e., the amount of German tax that is properly due and not subject to refund.
If the US holder does not seek a refund of the excess withholding from the BZSt, the IRS may challenge the creditability of the excess amount on the ground that it is not a "compulsory" payment within the meaning of Treasury Regulation § 1.901-2(e)(5). Under that regulation, a foreign tax is not considered a compulsory payment to the extent the taxpayer is entitled to a refund or credit from the foreign country but has failed to take reasonable steps to obtain such refund or credit. Accordingly, US holders who are subject to the full statutory rate of German withholding tax are strongly advised to seek a refund of the excess from the BZSt in order to preserve the creditability of the remaining Treaty-rate amount.
Deduction Alternative. As an alternative to claiming a foreign tax credit, US holders may elect to deduct (rather than credit) foreign taxes paid or accrued under Section 164 of the Code. However, a deduction is generally less favorable than a credit, because a deduction reduces taxable income dollar-for-dollar whereas a credit reduces the US tax liability dollar-for-dollar. The election to credit or deduct foreign taxes is made on an annual basis and applies to all foreign taxes paid or accrued by the taxpayer during the taxable year.
Corporate Holders — Basket Analysis. For corporate holders of ADSs, the foreign tax credit analysis requires careful attention to the Section 904 separate limitation categories. Dividends from Halcyon will generally fall in the "passive category" for most corporate holders, unless the corporate holder is a financial services entity (in which case the income may fall in the "general category") or otherwise qualifies for a different categorization. The allocation and apportionment of expenses (including interest expense) to foreign-source income categories can significantly affect the amount of foreign tax credit that is usable in a given year.
The prospectus tax disclosure should note these complexities and recommend that US holders consult their own tax advisors regarding the availability, amount, and limitations of the US foreign tax credit with respect to German withholding taxes on Halcyon dividends.
E. PFIC Considerations — Cross-Reference
If Halcyon were classified as a passive foreign investment company ("PFIC") within the meaning of Section 1297 of the Code for any taxable year during which a US holder holds ADSs, the US holder would face significantly adverse tax consequences, including the following:
(i) Excess Distribution Regime. Under Section 1291 of the Code, "excess distributions" (including certain gains on the disposition of PFIC stock) would be subject to a special tax regime under which the excess distribution is allocated ratably over the holder's holding period, the portion allocated to the current year (and any year before the company became a PFIC) is taxed as ordinary income, and the portions allocated to prior PFIC years are taxed at the highest rate in effect for those years, plus an interest charge on the deemed deferred tax.
(ii) Loss of QDI Treatment. Dividends from a PFIC are not eligible for treatment as qualified dividend income and would be taxed at ordinary income rates.
(iii) Mark-to-Market or QEF Elections. A US holder may be able to mitigate the adverse PFIC consequences by making a timely "mark-to-market" election under Section 1296 (available if the ADSs are "marketable stock" regularly traded on a qualified exchange) or a "qualified electing fund" ("QEF") election under Section 1295 (which requires annual information from the PFIC). Each election has its own requirements and consequences.
As noted in Section I, a separate detailed PFIC analysis memorandum has been prepared by the undersigned under this matter number. The conclusion of that analysis is that Halcyon is not expected to be classified as a PFIC for its taxable year ending December 31, 2025 or for the foreseeable future. Specifically, Halcyon satisfies the active business exception: less than 25% of its gross income is passive income (the "income test"), and less than 50% of the average fair market value (or adjusted tax basis, if elected) of its assets produce, or are held for the production of, passive income (the "asset test"). The Company's revenue is overwhelmingly derived from the design, manufacture, and sale of SiC and GaN semiconductor devices, and its asset base consists principally of fabrication facilities, equipment, intellectual property, and working capital employed in active business operations.
Notwithstanding this favorable conclusion, the prospectus will contain a risk factor and detailed PFIC disclosure in the taxation section. This is appropriate because PFIC status is a factual determination that must be made on an annual basis and is subject to change based on the Company's income, assets, and activities in future years. The prospectus should include cautionary language to the effect that there can be no assurance that the Company will not be classified as a PFIC in the current or any future taxable year, that the IRS could challenge the Company's PFIC classification, and that US holders should consult their own tax advisors regarding the potential PFIC consequences of holding ADSs.
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 ADSs acquired in the Offering will generally be equal to the purchase price paid for the ADSs (including any underwriting discounts or brokerage commissions treated as part of the cost of the ADSs).
If the ADSs have been held for more than one year at the time of disposition, the resulting capital gain or loss is long-term capital gain or loss. For individual US holders, long-term capital gains are currently taxable at preferential rates of 0%, 15%, or 20%, depending on the holder's taxable income level. Short-term capital gains (from ADSs held for one year or less) are taxed at ordinary income rates. Corporate holders are generally taxed on capital gains at the same rate as ordinary income.
The deductibility of capital losses is subject to limitations under the Code. For individual holders, capital losses may be deducted against capital gains plus up to $3,000 of ordinary income per year, with any excess capital losses carried forward to future years. For corporate holders, capital losses may be deducted only against capital gains.
The NIIT of 3.8% described in Section VII.B above may also apply to net capital gains recognized by high-income individual holders upon the disposition of ADSs.
B. Source of Gain
Under the Internal Revenue Code, gain from the sale of stock (or ADSs representing stock) by a US holder is generally treated as US-source income under Section 865(a) of the Code. This sourcing rule has important implications for the foreign tax credit analysis: because the gain is US-source, a US holder who is subject to any foreign tax on such gain may not be able to credit that foreign tax against US tax on the gain (because the foreign tax credit is generally limited to US tax attributable to foreign-source income).
As a practical matter, Germany generally does not impose tax on capital gains recognized by non-resident holders on the sale of shares in a German corporation, except in the limited circumstance described below. Under German domestic law, capital gains from the alienation of shares in a German corporation by a non-resident

MEMORANDUM

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT

MATTER NO.: 1032-00003

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