2022 Partner Footnotes

For tax year 2021, it was communicated that Azerion Group N.V. (formerly known as European FinTech IPO Company 1 B.V. or “EFIC1”) (the “Company”) was considered a “passive foreign investment company” (“PFIC”) for U.S. federal income tax purposes, pursuant to which shareholders of the Company that are U.S. persons (each a “Shareholder”) could possibly make an election under Section 1295 of the U.S. Internal Revenue Code (the “Code”; all “section” references are to sections of the Code) to treat the Company as a Qualified Electing Fund (“QEF”) for U.S. federal income tax purposes (a “QEF Election”). Please refer to the 2021 Annual PFIC Statement available on our website for further information.


On 1 February 2022, Azerion Holding B.V. (with its subsidiaries and entities it exercises control over), with net revenue of €308.1M and €452.6M in 2021 and 2022, respectively and EFIC1, a special purpose acquisition company (“SPAC”) listed on Euronext Amsterdam, completed a business combination. Upon completion of the PFIC testing, and consultation with external tax and legal advisors, it has been concluded that the Company did not meet the criteria to be classified as a PFIC with respect to tax year 2022.


The PFIC regime generally applies in a year when a U.S. person owns an interest in a foreign corporation that is treated as a PFIC. Section 1297(a) defines a PFIC as any foreign corporation if (1) 75 percent of more of the gross income of such corporation for the taxable year is passive income (the “income test”), or (2) the average percentage of assets held by such corporation during the taxable year which produce passive income, or which are held for the production of passive income, is at least 50 percent (the “asset test”).


If a foreign corporation is a PFIC during a U.S. person’s holding period and the U.S. person does not have a “QEF election” under section 1295 in effect with respect to its entire holding period, the U.S. person is generally subject to a special set of unfavorable “excess distribution” rules under section 1291 with respect to any gain recognized on the sale or other disposition of the PFIC stock, and certain distributions, if any, that it receives with respect to the stock. If a QEF election is  filed by a U.S. person for a tax year after the first year of its holding period for the PFIC stock, the PFIC would be an “unpedigreed” QEF with respect to the U.S. person and, under the “once a PFIC, always a PFIC” principle set forth in section 1298(b)(1), the excess distribution rules will still apply to the portion of any excess distribution allocated to a taxable year prior to the year of the QEF election.


As a result of the PFIC testing for tax year 2021, the Company was over the mentioned thresholds for both the income test and asset test, thus classifying it as a PFIC. Section 1298(b) provides a limited “start-up” exception, under which a foreign corporation that would otherwise be characterized as a PFIC under Section 1297(a) is not treated as a PFIC for the first tax year in which it has gross income if it meets certain criteria. During tax year 2021, the Company did not earn gross income.


As a result of the testing for tax year 2022, the Company was not over the mentioned thresholds for both the income test and asset test and as such, is not classified as a PFIC for tax year 2022.


If you are a U.S. person and have invested in the Company in either 2021 or 2022, we recommend that you consult your tax advisor with regards to your specific reporting obligations, if any. If you are a Non-U.S. person with US investors, please provide this information to your investors where required, so they may properly determine their reporting obligation, if any.