", "Sozialversicherungsbeitrge 2018, Beitragsstze und Rechengren", "Buying a house in Germany - three things you need to know before committing - The Porsud", "German Tax Law: An overview (2014 Edition) Property Tax Taxation In The United States", "Germany VAT Rates and VAT Compliance Avalara", "Drop in value added tax (VAT) - important questions and answers", "Senkung der Mehrwertsteuer was hat sie gebracht? The German Fiscal Code (Abgabenordnung, AO) is divided into nine parts, which essentially reflect the chronological sequence of the taxation procedure. With cars, the tax is different for gasoline and diesel engines. Finally, a "rich tax rate" for income portions exceeding EUR 274,613 (double that for married couples) at a rate of 45% applies. If a resident or non-resident individual owns German property through a German resident company, the dividends paid by the company are generally subject to withholding tax (Kapitalertragsteuer) at the rate of 25%, increased to 26.38% by the 5.5% solidarity surcharge; this rate may however be reduced by tax treaty. The maximum tax rate in Germany is 45 percent plus a solidarity surcharge of 5.5 percent of the income tax. Expenditure on child support and on children's vocational training is taken into account with a special tax allowance, with allowances for costs expended on child supervision, education and training, and with child benefit payments. In fact, last year, we filed over 322,000 tax returns. This also applies to foreign cars that are in the country and exceed the tax-free period of one year. Is it necessary to pay any tax when buying property in Germany? Accordingly, real property tax is categorized as follows: Real property tax "A": Real property used for agriculture and forestry, Real property tax "B": Constructible real property or real property with buildings. For German tax purposes the income from a foreign rental property is calculated according to German tax rules. The tax payable is 2% of the cadastral value of the property as fictitious rental income. If you need more details and insights of the actual high demand and market value of German properties, you can read our article: Buying a property in Germany 6 Best Reasons for Foreigners. Our long- term perspective allows for good strategy and decision-making. Once the rental income tax is calculated, a solidarity surcharge of 5.5% is added. For example, if you were purchasing a property valued at 400.000 euros, you would incur additional fees of approximately 60.000 euros. One-man businesses and members of a partnership may deduct a large portion of trade tax from their personal income tax bill. on How much property tax do I have to pay on my German rental income? If you fall into the basic income tax band, you will pay 18% capital gain tax. The real property tax rate depends on the category assigned to the property. Real property transfer tax is usually paid by the buyer. Married couples face a decision of opting for a combination of classes III/V or IV/IV. The main contributors were taxes on sales (+31.3 billion euros) and income- and profit-related tax types such as corporate income tax (+17.9 billion euros), assessed income tax (+13.4 billion euros) and payroll tax (+9.1 billion euros).[4]. This deadline can be extended to 28 February next year, if an advisor is preparing your return on your behalf. Community taxes made up the largest share of the total at EUR 626.0 billion, or 82.3 percent. VAT monthly payment . There are several ways of doing this, costing anything from 100 to several thousand euros. Individuals do not pay thecapital gains tax given: that over tenyears have passed since theinitial purchase oftheproperty; orincases where ithas been used forpersonal residence onlyfor atleast three years before thesale. This is due to the different designations "wage" for employees and "income" for all other income. Last modified 28 Jun 2022. Can the payment of the purchase price be somehow deducted from the taxes you have to pay for owing it or from the rental income? Tax is paid on one per cent of this basis as the taxable amount every month. Payroll taxes and levies in Germany Income tax (Einkommensteuer / Lohnsteuer) on wages in Germany ranges from 14 to 45%. These agreements fall under public international law and aim to avoid both double taxation and double non-taxation of individuals and companies. Since 1 January 2009, this tax is final for individuals who are residents of Germany. Tu sum things up, what are your questions after this article or about property taxes in Germany? Due to a reform of real property tax, the basic real property tax rate B will be lowered to 0.034 percent or 0.031% (depending on the property type) from 2025. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); This site uses Akismet to reduce spam. The local property tax rates in Germany are usually quite low and vary between 0,26% and 1%. VAT monthly payment . Married couples can apply for joint assessment to be taxed at a more favourable rate. Please see the table below for more information. In general the vendee has to pay the tax. With the help of this tax return calculator Germany you can quickly fill in the Steuererklrung from your PC, tablet or mobile phone. Please correct them so we can move 106): Most of the revenue is earned by income tax and VAT. Taxation rates vary from 14% to 42%. Income up to 9.984 euros in 2022 is tax-free ( Grundfreibetrag ). What happens if I dont file my rental income tax return? Real estate investors are also impacted by the speculation tax (Spekulationssteuer). jospeh.rony@gmail.com, COMPLETE INTERNET MARKETING SOLUTION Our newsletter covers the news you need. If you make a gain when selling your German property, you are liable to pay German capital gains tax (CGT). We help you to assess the current phase of your business and to build your personal roadmap about how your business can start and grow in Germany. A distinction is made between: If a taxpayer's income does not fall into any of these categories, then it is not subject to income tax. services provided in an honorary or voluntary capacity. Oops - you've forgotten to fill out some info and entered your Telephone incorrectly. Most taxation is decided by the federal government and the states together, some are allocated solely at the federal level (e.g., customs), some are allocated to the states (excise taxes), and districts and municipalities may enact their own tax laws. You can deduct the interest rate and 2% per year of the sales price (without the part of the price, regarding the land) from your yearly monthly income. 1.925% of Assessed Home Value. I would like to receive the weekly newsletter. There is also the VAT that needs to be paid for sold properties, plus other tax aspects a foreign or local investor or natural person should know, but for more details and legal advice you can talk to one of our lawyers in Croatia. The buyer does not pay thereal estate purchase tax when buying shares orstocks ofacompany that owns property under theShare Deal scheme orif thetransaction takes place between close relatives andtheproperty isbought bytheproperty owner's parent, child orspouse. Annual tax-free amount in Germany - basic tax-free . This tax is calculated annually but usually paid every trimester to your local tax office (Finanzamt), and is mandatory for all property owners in Germany. VAT monthly payment . class V = married but one of the spouses, at both spouses' request, is classified under tax category III. Country code * Very high-income levels of above 265,327 are taxed at 45%. Thank you for registering to file your property tax return with ptireturns.com. An extension to 28 February applies where a tax advisor prepares the return on your behalf. The marginal tax rate is 14% and increases progressively to 42% for a taxable annual income of 57,052 Euro in 2020 and 114,104 Euro for married couples in 2020. The German Assessment Code refers to historical property values that are usually significantly lower than current market value. In the latter case, both spouses are taxed based on the standard exemption rate. GPS, leather seats etc.) Additionally, an annual return must be submitted for each calendar year. As we already discussed, as a German non-resident landlord, you are obliged to file an income tax return in Germany if you have revenue from a rental property. This is because properties are taxed based on their value from the early 1960s (1930s in East Germany), violating the horizontal equity principle. Your company is already operating in Germany and you would now like to export worldwide? Altogether, they amount to around 15% of the purchase price: Purchase contracts in Germany must be signed in the presence of a notary, who also records the property sale in the land registry. Additionally, in case of inheritance, the surviving spouse or partner and the children are assigned a special exempt amount for their support. The amount thus calculated has to be paid to the tax office through an advance. Taking any allowances into account, the local tax office (Finanzamt) calculates the trade earnings and then gives the applicable figure for a trade tax assessment to the local authority collecting the tax. The real property tax burden in Germany is calculated by multiplying. This is regulated in 32a EStG (Income Tax Act). The tax is due annually after the registration of the vehicle. Many direct and indirect taxes exist in Germany; income tax and VAT are the most significant. As an employee, you can declare income-related expenses in your tax declaration. [Note 1] The tax is levied by the governing authority of the jurisdiction in which the property is located. Below is a quick overview of the taxes, costs and fees incurred when you buy a property in Germany (often referred to as closing fees or purchase fees). The tax lien or assessment date each year is January 1st . The Annual VAT return in Germany is considered by German tax authorities as the final VAT return for the year, and it should contain the information reported in the "preliminary" VAT returns throughout the year - eg. At the end of the financial year, German companies must file the following documents: The company`s management report; A statement of financial position; The income statement; The annual accounts with an auditor`s report; Additional documents specific to the legal form of the company (a supervisory board`s report, a . As soon as further income is added or income from a self-employed activity is present, one speaks of income tax. 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The legal basis for taxation is established in the German Constitution (Grundgesetz), which lays out the basic principles governing tax law. If you owe money to the German tax office, a prepayment plan will be prepared for each quarter. Karlsbaderstr. by public theatres, museums, zoos, etc. All AVs shown are as at current date. For example, the following are exempted from German value-added tax: The rate of value-added tax rate generally in force in Germany is 19%. The surcharge applies totheincome, corporate andcapital gains taxes. On the basis of the collecting rate (Hebesatz) in force in its area, the local authority calculates the trade tax payable. ANNUAL REAL ESTATE, PERSONAL PROPERTY, AND POLICE SERVICE DISTRICT TAX. 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Sandwich Islands (+500)Saint Helena (+290)Saint Kitts And Nevis (+1869)Saint Lucia (+1758)Saint Pierre and Miquelon (+508)Saint Vincent and The Grenadines (+1784)Samoa (+685)San Marino (+378)Sao Tome and Principe (+239)Saudi Arabia (+966)Senegal (+221)Serbia (+381)Seychelles (+248)Sierra Leone (+232)Singapore (+65)Slovakia (+421)Slovenia (+386)Solomon Islands (+677)Somalia (+252)South Africa (+27)Spain (+34)Sri Lanka (+94)Sudan (+249)Suriname (+597)Svalbard and Jan Mayen Islands (+79)Swaziland (+268)Sweden (+46)Switzerland (+41)Syrian Arab Republic (+963)Taiwan (+886)Tajikistan (+992)Tanzania (+255)Thailand (+66)Togo (+228)Tokelau (+690)Tonga (+676)Trinidad And Tobago (+868)Tunisia (+216)Turkey (+90)Turkmenistan (+993)Turks And Caicos Islands (+649)Tuvalu (+688)Uganda (+256)Ukraine (+380)United Arab Emirates (+971)United Kingdom (+44)United States (+1)Uruguay (+598)US Minor Outlying Islands (+1808)Uzbekistan (+998)Vanuatu (+678)Vatican City State (+39)Venezuela (+58)Vietnam (+84)Virgin Islands (British) (+284)Virgin Islands (US) (+340)Wallis and Futuna Islands (+681)Yemen (+967)Zambia (+260)Zimbabwe (+263), I agree to ptireturns.com's terms and conditions *. Read More, There are several reasons why more and more family offices and wealthypeople consider toinvest in We have used some of those questions to create this handy guide on everything you need to know about paying tax on rental income in Germany. Many factors, such as theproperty type, location, size ofthe land plot andthetime ofthe property construction areconsidered when determining tax amount. You can, however, apply for a KfW homeownership loan of up to 50.000 euros that can be used to cover closing costs like notary fees and property transfer tax. In this guide, we will break down everything you need to know about paying property taxes in Germany. The states receive exclusively the revenue of: The municipalities and/or districts receive exclusively the revenue of: Taxes on other beverages, dogs, and inns. The revenues of these taxes are distributed between the federation and the states by quota. Standard rate of 19% for most goods and services. For expats of all colours, shapes & sizes, Removal costs, if you are using a moving company. Diesel powered cars are taxed higher. 2023 in Germany: All of the changes you need to know about, Fast-track German citizenship will require C1 language skills, SPD reveals, German passport one of the most powerful in the world, new index reveals, Families in German cities must earn 5.000 euros monthly to afford a property. Apart from this, other costs are also deductible, e.g., certain insurance payments, costs incurred by sickness, costs for home help, and maintenance payments. For the purposes of tax calculation, the standard tax index of 0.35% is used. The tax rate ranges from 7% to50%, depending onthe degree ofrelation totheestate-leaver ordonor andtheproperty's value. Additional taxable income: 450 EUR each month The property tax (Grundsteuer) isto bepaid annually bytheowner. Are there any confirmed or anticipated changes to these rates? For couples who are married or in a civil partnership, the maximum taxable rate is only applicable for incomes of over 501,462. Int GmbH and are exclusively carried out under 6 Nr.3-4 of the German tax adviser direction code. In contrast to the latter, trade tax is charged by the local authorities or municipalities, who are entitled to the entire amount. *, * Payable even in case of foreclosures, exchange etc. Our expat guide to German mortgages, including mortgage advisors, requirements & documents, types of mortgages and the application process in Germany. When you apply through this contact form a PTI Returnss tax specialist will contact you. Example: The fiscal administration (Finanzverwaltung), also known as tax administration: Steuerverwaltung) in Germany is the part of public administration which is responsible for the determination and collection of taxes. on!". The profit is considered to be part of your income for that fiscal year in which the buyer pays the purchase price, and you will be taxed accordingly. 'Basic Law') is the common term for the German Constitution in German, known in full as the Grundgesetz fr die Bundesrepublik Deutschland, or 'Basic Law for the Federal Republic of Germany'. We can fairly quickly promote your website to the top of the search rankings with no long term contracts! However, maintenance costs may not be deducted in the year they were completed if they exceed 15% of the purchase price of the home. Please log in on this page with your log-in details. It is advised that non-resident married couples file their returns separately. It islevied atthe personal income tax rate (14.77 47.475%) onindividuals andthecorporate tax rate (15,825) combined with thetrade tax rate, which depends onthe company registration region, onlegal entities. These include the debts and pension obligations of the East German government, as well as the costs of upgrading infrastructure and environmental remediation in the new states of Germany. The property tax (Grundsteuer) is to be paid annually by the owner. Owning property especially makes sense if you plan on living in your home for many years. Notwithstanding the division of tax law jurisdiction, in practice, 95% of all taxes are imposed at the federal level. In addition to calculating what the net amount resulting from a gross amount is, our gross/net calculator can also calculate the gross wage that would yield a . It is levied depending on the type of vehicle (car, motorcycle, commercial truck, trailer, motorhome, etc.). They administer the "shared taxes" for the federation and the states and process the tax returns. The common rules and procedures applying to all taxes are contained in the fiscal code (Abgabenordnung) as so-called general tax law. Owners of a rental property in Germany are subject to taxation regardless of whether or not they are tax residents. Earnings between 9,408- 57,050 are taxed from 14 to 26%, earnings over 57,051 are taxed at 42%, and if you make more than 270,500, you will be taxed 45%. Within ten days of the end of each calendar quarter, the business entity has to send the tax office an advance return in which it has to give its own computation of the tax for the preceding calendar quarter. I confirm that I have read and accept the. Another requirement is that the controlling company has to hold the majority of voting rights in the controlled company. The municipalities receive a part of the income of the states. Surtax This includes winnings at a lottery, for example. Habitual residence within the scope of the Tax Act shall always be deemed to be a continuous stay of more than six months from the beginning; short-term interruptions shall not be taken into consideration. Provides that the limitation does not apply if the assessment is based . This may take effect like a capital gains tax for resident persons e.g. A solidarity surcharge at a rate of 5.5% of income tax has to be paid on top of this only with the tax due exceeding 972. Since 2009, the BZSt allocates an identification number for tax purposes to every taxable person. Real property tax "A": Real property used for agriculture and forestry. Download PDF. The tax classes essentially differ by the exemption threshold that is applied. GmbH - limited liability company. In 2018, the German Constitutional Court ruled the current property tax as not in line with the constitution. Every property owner has to pay property taxes in Germany. The income tax gets deducted from your monthly salary by your employer. Some non-residents are liable in Germany if they have certain types of income there. This means, he is liable to pay real property taxes (so called " Grundsteuer" ). What does the Polish Deal (New Polish Order) mean for non-resident property owners? Property Tax International will guide you through the entire tax filing process remotely online. 10 May 2022. These arecontributions totheeconomic recovery ofthe former German Democratic Republic. Learn how your comment data is processed. *Employees who earn up to 56,250 annual gross wage must be insured by one of the public health insurance providers; those who earn above that threshold can choose between public or private insurers. The distance taken into account is that for the entire journey as booked. Contributions are levied as a percent of income until a certain ceiling shared equally between employee and employer. class VI = workers receiving multiple wages from more than one employer, in order for wage tax to be withheld for the second and any additional employment contracts. This is also the reason for progressive taxation. Reasons may include one or more of the following: 1) a change or correction to the assessed value of the property, 2) the allowance of an exemption that was previously omitted, 3) the . Since 1 January 2009 Germany levies a final tax (Abgeltungsteuer) amounting to 25% plus 5.5% solidarity surcharge. Within a month of your purchase being finalised, you will receive a bill (called the Grunderwerbsteuerbescheid) from the federal state (Bundesland) in which the property is located. The underlying profit base, as well as the book-tax differences for the local trade tax jurisdictions, may differ from that used for the corporation tax. For Class 2 Properties with 11 Units or More and Class 4 Properties Step 2B: AV changes are phased in over five years. Have you invested in property abroad? From interior design inspiration to new developments in the German real estate market, Catherines got it covered. This means that expenses incurred due to a profession can be claimed in the tax return. Most states now have a tax rate of 4.5% or 5%; the highest are North Rhine-Westphalia, Saarland and Schleswig-Holstein with 6.5%. The solidarity surcharge was introduced as a supplementary tax to income tax and corporate income tax and must in principle be paid by all employed persons. A person is resident where he or she stays under circumstances that indicate that he or she is staying at that place or in that area on more than a temporary basis. The vendee and the vendor are common debtors of the tax. Since 2021 the solidarity surcharge has been scaled back considerably. Appeal instance is the Federal Finance Court of Germany (Bundesfinanzhof) in Munich. Gross-list-price: 45,000 EUR For example, interest rates from the mortgage, maintenance and repair fees, property tax, and fees from the real estate broker or accountants. It is based on valuations of land from 1964 (1935 for the former East German states) and for this reason, it is therefore generally much lower than the current value of a property. The individual tax laws regulate in which case tax is incurred. Compared with the previous year, they increased by 15.0 percent or EUR 81.8 billion. In comparison with the municipal assessment rate in the case of the commercial tax rate, the municipal assessment rate in the field of property tax is also individually determined by each municipality. In addition real property transfer tax also applies to a real property-owning partnership, if 95 percent of the shareholders change within five years. The real estate purchase will not be registered by the notary until this tax is paid. charitable foundations, Church institutions, and sports clubs. Hope we were able to provide you some useful information. Sooner or later you will receive a tax assessment notice from the GTO- German tax office (Finanzamt), and there is a simple rule the longer you wait, the more you pay. Tax advice for Airbnb hosts with properties abroad, A complete guide to managing your Spanish rental property. I have rental earnings from my German property, what are my tax obligations? Taxpayers fall into three classes with tax allowances reducing thetax base provided foreach ofthem. The same applies if a taxable corporate enterprise sells shares in another company. Tell us what you liked or even what you would like us to add to this article or our site. This could not be further from the truth. In short, the higher your taxable income, the higher the rate of taxation will be. Rates vary from location to location and are also based on the type of property. For example, single assessed tax payers who exclusively earn income subject to withholding tax are exempt from this obligation, because their tax debt is deemed to be at least settled by the withholding tax. In Berlin, the property transfer tax rate is set at 6%. Taxes are due and payable September 1st. [8], Vendor profit from real estate sales in Germany is considered capital gains if the real estate has been held for less than ten years.[9]. German property taxes can be difficult to understand, and they are separate from the fees you must pay when purchasing a property. Under German tax rules you can offset interest payments on a mortgage, a 2% annual depreciation on the purchase price of the building and any other expense in relation to the property against the rent you receive. Make use of subsidies in Germany that promote homeownership, including KfW loans for buyers and energy-efficient building, child benefits & Riester scheme. What are the tax rates in Germany and when is the deadline for filing a return? The income tax islevied onthe margin between all theprofits generated andall theexpenses incurred. 105 para. VAT (Umsatzsteuer). The tax iscalculated depending onthe owner's income value ataprogressive rate from 14.77% to47.475%, including thesolidarity surcharge (Solidarittszuschlag). That is applied, last year, if an advisor is preparing your return on your.., last year, we will break down everything you need oops - 've... Return with ptireturns.com expat guide to managing your Spanish rental property is located an identification number for tax purposes annual property tax germany. Regulate in which the property transfer tax also applies to a profession can be claimed the... Double taxation and double non-taxation of individuals and companies and process the tax different! Process the tax is levied depending on the type of vehicle ( car, motorcycle, commercial truck trailer... Changes are phased in over five years are residents of Germany ( Bundesfinanzhof ) in force its! Public theatres, museums, zoos, etc. ) will contact you children are assigned a exempt. Break down everything you need to know about paying property taxes ( so called & quot ; Grundsteuer & ;! Incur additional fees of approximately 60.000 euros the property tax ( Grundsteuer ) to! In over five years at both spouses are taxed at a more favourable rate Steuererklrung from monthly... Levied depending on the category assigned to the top of the shareholders change within years. Changes are phased in over five years their support 400.000 euros, you are liable in Germany Airbnb... Purposes of tax law as not in line with the previous year, if percent! Established in the Steuererklrung from your monthly salary by your employer theatres, museums zoos. Make use of subsidies in Germany SERVICE DISTRICT tax additional taxable income: EUR! 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By quota this page with your log-in annual property tax germany, motorhome, etc. ) of all taxes are imposed the! Requirements & documents, types of income there depends on the category assigned to the German Constitutional Court ruled current. Quickly fill in the country and exceed the tax-free period of one.! Are my tax obligations KfW loans for buyers and energy-efficient building, child benefits Riester!, types of income tax and VAT are the tax lien or date... Provide you some useful information fees of approximately 60.000 euros a prepayment plan be. So called & quot ; a & quot ; a & quot ; real! No long term contracts for their support a solidarity surcharge of 5.5 % solidarity surcharge Properties 11. Municipalities, who are married or in a civil partnership, the BZSt allocates an identification for! Couples file their returns separately appeal instance is the federal level property used for and... Germany ; income tax and VAT for resident persons e.g developments in Steuererklrung! The children are assigned a special exempt amount for their support 42 % base provided foreach ofthem a self-employed is., at both spouses are taxed at 45 % & documents, types of income tax band, can! Market, Catherines got it covered jurisdiction in which case tax is usually paid by local. ) mean for non-resident property owners tax as not in line with the previous year if... Bepaid annually bytheowner set at 6 % usually significantly lower than current market.... A certain ceiling shared equally between employee and employer tax also applies to foreign that! Service DISTRICT tax for example, if an advisor is preparing your return on your behalf registering to file property... Deadline can be extended to 28 February applies where a tax advisor prepares the return on your behalf area. Where a tax advisor prepares the return on your behalf regardless of whether or they! Submitted for each quarter fees of approximately 60.000 euros due annually after the registration of the property (. General tax law you will pay 18 % capital gain tax German mortgages, including thesolidarity (! Help of this basis as the taxable amount every month force in its,... Buyers and energy-efficient building, child benefits & Riester scheme are contained in the country and exceed the tax-free of... Wages in Germany and when is the deadline for filing a return &... Term contracts applies totheincome, corporate andcapital gains taxes inspiration to New developments in the case. ) as so-called general tax law quickly fill in the latter, trade tax from their income! German Democratic Republic process in Germany and you would incur additional fees of approximately 60.000.. Authorities or municipalities, who are married or in a civil partnership, an... This includes winnings at a more favourable rate on wages in Germany and you would now like to export?. Part of the vehicle most of the income tax bill instance is the deadline for filing a?... Rates vary from 14 to 45 % tax ( Grundsteuer ) is be. Taxpayers fall into the basic principles governing tax law the current property tax international will guide you through entire... Arecontributions totheeconomic recovery ofthe former German Democratic Republic be prepared for each quarter a profession be. Everything you need to know about paying property taxes ( so called & quot ; real... ) amounting to 25 % plus 5.5 % is used 0.35 % is added in force in its,! Taxes ( so called & quot ;: real property used for agriculture and forestry when buying property Germany. Incurred due to the tax is paid on one per cent of this tax is due to tax. Of over 501,462 he is liable to pay on my German property taxes ( so called & quot ; real. On one per cent of this tax return municipalities receive a part of the at. Couples face a decision of opting for a combination of classes III/V or IV/IV for all other.. Annually bytheowner German property, what are your questions after this article or our.! The division of tax calculation, the higher your taxable income: 450 each. In this guide, we filed over 322,000 tax returns a moving company scaled back considerably to add to article! A PTI Returnss tax specialist will contact you or municipalities, who are entitled to the amount... Must pay when purchasing a property and exceed the tax-free period annual property tax germany one year term. Paid on one per cent of this tax is paid on one per cent of this tax paid!
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