# Modelo 720 Missed year fines



## neil_h (Oct 15, 2020)

Hello.
I've been living in Spain since September 2017 and I am now a full time resident here. Every year I've filled my tax return, and on that stated that I rent out a property in the UK, and declared the rental income.
However, it's only today I've come to learn about Modelo 720. I was completely unaware of it until now, and it's taken me completely by surprise.
My share of the property in the UK is worth more that 50,000 euros, so from what I now understand, I should have declared that on Modelo 720 when I first came to Spain.
My question is, if I fill in the Modelo 720 for 2021, is this enough to get back on track with my declaration, or would I need to fill in one for every other years sine I arrived (2018,2019,2020)?
And if that's the case, what kind of fines am I looking at? A fine for each year? 😬


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## kaipa (Aug 3, 2013)

Did you never use a gestor or lawyer for your tax declaration? If you did I would have thought they would have told you about the 720. Obviously people are going to start telling you the fines are very large for failure to do this and that is not going to help. The best thing to do is to talk to a lawyer about it as there will be a way to sort it out without any sizeable fine. The fact that you have clearly declared income from a foreign property will no doubt be enough to convince the tax man you havent been hiding anything. Try not to get involved in forum hypotheticals- none of us are Spanish lawyers


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## Chopera (Apr 22, 2013)

For property I think the value you are meant to declare is based on its "valor catastral". Since there is no such thing as a valor catstral in the UK, you are instead meant to apply a multiplier to the amount you oiginally paid for the property. From memory (I did this many years ago) this comes out as much less than the actual purcase value. So you might find that the amount you have to declare for the property is less than €50k, especially after you have converted it from pounds to euros. Of course this depends on when you purchased the property. But anyway, it might be worth investigating the amount you have to declare first


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## neil_h (Oct 15, 2020)

kaipa said:


> Did you never use a gestor or lawyer for your tax declaration? If you did I would have thought they would have told you about the 720. Obviously people are going to start telling you the fines are very large for failure to do this and that is not going to help. The best thing to do is to talk to a lawyer about it as there will be a way to sort it out without any sizeable fine. The fact that you have clearly declared income from a foreign property will no doubt be enough to convince the tax man you havent been hiding anything. Try not to get involved in forum hypotheticals- none of us are Spanish lawyers


About the gestor/lawyer question, no, I've done all of my tax declarations myself. 
I live in Catalunya, and don't interact much with fellow expats, so this tax has never come up in conversation so far, hence me only learning about it today. Thanks for the advice, I'll consider speaking to a lawyer.


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## neil_h (Oct 15, 2020)

Chopera said:


> For property I think the value you are meant to declare is based on its "valor catastral". Since there is no such thing as a valor catstral in the UK, you are instead meant to apply a multiplier to the amount you oiginally paid for the property. From memory (I did this many years ago) this comes out as much less than the actual purcase value. So you might find that the amount you have to declare for the property is less than €50k, especially after you have converted it from pounds to euros. Of course this depends on when you purchased the property. But anyway, it might be worth investigating the amount you have to declare first


Hello, thanks for the response. I'm very interested in the multiplier thing you mentioned. Where would I get more information about this multiplier?
The thing about my flat is, I only 35% of it. But the 35% I own is more that the 50,000 euros based on the price I bought the flat. Even more in todays prices. But maybe with this multiplier (if the multiplier equates to less than 1) things could get more hopeful 🤞🤞🤞.


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## Chopera (Apr 22, 2013)

neil_h said:


> Hello, thanks for the response. I'm very interested in the multiplier thing you mentioned. Where would I get more information about this multiplier?
> The thing about my flat is, I only 35% of it. But the 35% I own is more that the 50,000 euros based on the price I bought the flat. Even more in todays prices. But maybe with this multiplier (if the multiplier equates to less than 1) things could get more hopeful 🤞🤞🤞.


I think it might be 1.1% of 50% of the purchase price. But the bad news might be that you have to declare foreign property regardless of whether its "valor catastral" is worth more than 50k, or indeed whether you are a part owner of the property. The fact is, I can't remember and I'm not an expert on this. I bought my property in the UK in the year 2000 and the calculated "valor catastral" based on 1.1% of 50% of purchase price would have been less than 50k, but I filled in the 720 anyway. I can't remember why (it was about 8 years ago). At the time I probably got the information by googling around, as I did the 720 myself, which was a real hassle. With hindsight I would have used a gestor. I'm sorry I can't be much more help, but this stuff isn't straight foward, and I only want to suggest possible areas to investigate rather than provide definitive answers (which I'm not qualified to do anyway)


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## Overandout (Nov 10, 2012)

Here is a link to a case study on a lawyer's website. I don't know them, nor have I checked any of the information but I assume it is more reliable than what most of us know:

In summary,

The value to be declared is the value of the property (purchase price) plus the costs of purchase (e.g. stamp duty and fees) multiplied by your % participation.

The value is not reduced by finance agreements of mortgages owed on the asset. 

Exchange rate applied should be that of 31st December on the year of aquisition and this value remains fixed in subsequent declarations (i.e. fluctuations for exchange rates are not declarable).

The fines are heavily reduced if the person who has missed declarations volutarily produces the backdated submissions (min 10k€ reduced to min 1.5k€).

Hope this helps.



https://iliaconsulting.com/modelo-720-caso-practico-inmueble-extranjero-no-declarado/#:~:text=Los%20inmuebles%20en%20el%20Modelo,por%20su%20precio%20de%20adquisici%C3%B3n.&text=El%20valor%20declarado%20del%20inmueble,pero%20nunca%20el%20importe%20financiado


.


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## kaipa (Aug 3, 2013)

The whole thing about the fines has been in the European courta while and it has ruled against them. My ex who worked for a law firm processing tax affairs said no one was ever fined excessively if it was clearly a mistake. The whole thing was intended to deal with international money laundering where millions were being concealed from the authorities. OP needs to get a lawyer to deal with it.


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## Yorick (Jul 4, 2017)

When we still had property in the UK, our accountant told us to stay as UK tax residents. That worked and we avoided any CGT


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## Alcalaina (Aug 6, 2010)

Yorick said:


> When we still had property in the UK, our accountant told us to stay as UK tax residents. That worked and we avoided any CGT


Is that legal?

As for the OP, when I inherited property in the UK and had to do a Modelo 720 I didn't have to supply any evidence of its value. I just put the value estimated by a British estate agent and was never asked for supporting documentation. That was six years ago.


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## neil_h (Oct 15, 2020)

Thanks for all of the responses and great information everyone. 
I'll definitely now try and find a good lawyer to help with this.


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## wroliveira (Jul 22, 2019)

Hold your horses.
Modelo 720 is about to be abolished.








La Justicia europea se pronunciará este mes sobre el 'Modelo 720'


El Tribunal de Justicia de la Unión Europea (TJUE) decidirá sobre la legalidad de la Declaración de Bienes en el Extranjero, el polémico Modelo 720, este mismo mes. Según ha podido saber elEconomista, los magistrados europeos tienen previsto emitir su sentencia final sobre el asunto el próximo...



www.eleconomista.es


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## neil_h (Oct 15, 2020)

wroliveira said:


> Hold your horses.
> Modelo 720 is about to be abolished.
> 
> 
> ...


Thanks! I'll keep my eye on this development 🤞


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## wroliveira (Jul 22, 2019)

Gone ! 
Modelo 720 ha caido : SpainFIRE (reddit.com)


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## Alcalaina (Aug 6, 2010)

Well not quite. Spain still has to comply with the EU's order.


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## kaipa (Aug 3, 2013)

Alcalaina said:


> Well not quite. Spain still has to comply with the EU's order.


Yes, dont get excited- Spain doesnt have to implement it and in fact a similar ruling was made years ago but the 720 and the fines still exist.


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## Joppa (Sep 7, 2009)

And the Finance Minister Montero has just announced that Spain will comply with the judgment by modifying Modelo 720, not abolishing it.


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## neil_h (Oct 15, 2020)

I'm very glad there has been some movement on this, even if Spain have said they plan to modify, rather than completely abolish.
That said, if it has been found to contravene EU since its original implementation, fines from its previous incarnation would surely be deemed unjustified?


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## Joppa (Sep 7, 2009)

neil_h said:


> I'm very glad there has been some movement on this, even if Spain have said they plan to modify, rather than completely abolish.
> That said, if it has been found to contravene EU since its original implementation, fines from its previous incarnation would surely be deemed unjustified?


Yes, the fines will most likely be abolished or heavily revised, as they were just too punitive. I would imagine Spain will try to argue that Modelo 720 doesn't fundamentally contravene EU freedom of capital flow and seek to maintain the principle of overseas assets declaration.


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## Lynn R (Feb 21, 2014)

As the Modelo 720 was introduced in 2012, before the automatic exchange of financial information under the OECD agreement began, I think there is an argument to be made that the Modelo 720 is now unnecessary as the Spanish Government would be being informed of overseas assets held by Spanish residents anyway and that information can and is being cross-checked against their annual tax returns.


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## dancingspider (Mar 4, 2018)

kaipa said:


> Did you never use a gestor or lawyer for your tax declaration? If you did I would have thought they would have told you about the 720. Obviously people are going to start telling you the fines are very large for failure to do this and that is not going to help. The best thing to do is to talk to a lawyer about it as there will be a way to sort it out without any sizeable fine. The fact that you have clearly declared income from a foreign property will no doubt be enough to convince the tax man you havent been hiding anything. Try not to get involved in forum hypotheticals- none of us are Spanish lawyers


You need an accountant to deal with a 720 submission, not a lawyer...


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## kaipa (Aug 3, 2013)

dancingspider said:


> You need an accountant to deal with a 720 submission, not a lawyer...


 Well I think I said gestor...but I used my lawyer as it is ( was) a form that carried extremely high fines and I wanted someone who understood the importance of doing it correctly , not a clerk in an asseoria who normally does the M1000 and was not aware of the problems with incorrect entries on the M720


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## dancingspider (Mar 4, 2018)

kaipa said:


> Well I think I said gestor...but I used my lawyer as it is ( was) a form that carried extremely high fines and I wanted someone who understood the importance of doing it correctly , not a clerk in an asseoria who normally does the M1000 and was not aware of the problems with incorrect entries on the M720


*"lawyer* for your tax declaration? If you did I would have thought they would have told you about the 720. Obviously people are going to start telling you the fines are very large for failure to do this and that is not going to help. The best thing to do is to talk to a *lawyer*"

No, you referred to a lawyer twice!

Furthermore a lawyer will do exactly as a accountant. They both will check the critical points and then pass it over to a clerk or PA to do the mundane repetitive detail.

Notwithstanding, it will be you that will get the fines if there are any errors in the 720, so they should always send you a draft copy of the 720, prior to submission, for you to review. 

If they do not then you should request it!

To the OP, I know of other expats who were oblivious to the fact that an 720 declaration was required. You are not alone.


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## kaipa (Aug 3, 2013)

Yep I use my lawyer for my tax declaration! Most lawyers will do this for you as part of the service. I pay 150 euros a year. For those this they deal with any legal queries, tax returns, etc. Saves having to pay a lawyer each time you have any kind of problem.


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## dancingspider (Mar 4, 2018)

kaipa said:


> Yep I use my lawyer for my tax declaration! Most lawyers will do this for you as part of the service. I pay 150 euros a year. For those this they deal with any legal queries, tax returns, etc. Saves having to pay a lawyer each time you have any kind of problem.


I do have a lawyer with whom I have used a few times and I will go back to him for legal advice, when the need arises.

So, to be clear, you lawyer does both your 720 declaration and your annual tax return for 150 euros?

I think I have issue with you when you state that, “For those this they deal with any legal queries”. I think for the amount you pay he will deal with simple queries, but I doubt that would include the purchase of a house or if you got into some difficulties with the law and required legal representation. These activities would attract additional fess, above and beyond what you have quoted. Can you give some examples of additional topics he has provided legal advice on, that were included in this annual fee in the past?

Also, I would not even consider having my 720 submitted without checking it in advance of submission, as I have found even these professional make mistakes, which had to be amended, prior to submission.


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## kaipa (Aug 3, 2013)

Obviously for proper legal work he charges but , for instance during the lockdown he sorted out my ERTE he also dealt with the Hacienda when I was investigated, plus got me a cita previa for my TIE when they were impossible to get in Torrevieja without some degree of enchufe. . Many lawyers will only give very cursory advice if you are not a client if you want it without paying. Most probably charge a minimum of 50 euros for a consultation so 150 euros for tax declaration and various other issues is a bargain.
When it comes to the 720 if I was capable of actually checking it then I wouldn't need someone to do it - the different fields and codes are quite complex even for Spanish speakers!!. Same goes for my modelo 100. Spanish folk get their gestor to do it as it is difficult. The Brits mistakenly think it is the same as the uk tax self assessment form ( which is very user friendly) the modelo 100 is not at all user friendly.


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## Lynn R (Feb 21, 2014)

My husband and I both completed our own Modelo 100's for 2021 last weekend without any problem. It is the sixth one we have done ourselves and so far neither of us have been subject to AEAT investigating our tax affairs (we had an appointment at the Hacienda office for them to complete our first two, free of charge, and I used an accountant to complete mine for the year in which I sold a property and bought another one, to make sure the capital gains situation was reported correctly). In normal years, as we have only occupational pension income which goes in one box, interest on savings accounts which goes in another box, and Crown Pensions which go in a third box as renta exenta, there is nothing else to be completed apart from the bank account details and confirming the declaration and signing it at the end, as the personal information stays the same from year to year and the details of the property in Spain I own stay the same as well. The personal allowances we are entitled to are automatically entered by the Renta Web programme. There is nothing the slightest bit complicated about it, although people whose financial affairs are more complex might well want an accountant or gestor to complete their returns.

And when we have been to the Hacienda office during the campana de la renta to have our returns completed for free, there have been plenty of Spanish people there doing the same thing so they don't all use gestors by any means. If Spaniards didn't make use of the free service I feel sure AEAT would not be offering it. Same with the service whereby taxpayers can make an appointment to have an AEAT employee phone them to complete their returns in a telephone conversation, it is a service used mainly by Spanish people, not foreigners. I am sure many of them, if they have a reasonable level of education, are computer literate and don't have complex finances, will complete their own returns online as well.


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## kaipa (Aug 3, 2013)

Lynn R said:


> My husband and I both completed our own Modelo 100's for 2021 last weekend without any problem. It is the sixth one we have done oourselves and so far neither of us have been subject to AEAT investigating our tax affairs (we had an appointment at the Hacienda office for them to complete our first two, free of charge, and I used an accountant to complete mine for the year in which I sold a property and bought another one, to make sure the capital gains situation was reported correctly). In normal years, as we have only occupational pension income which goes in one box, interest on savings accounts which goes in another box, and Crown Pensions which go in a third box as renta exenta, there is nothing else to be completed apart from the bank account details and confirming the declaration and signing it at the end, as the personal information stays the same from year to year and the details of the property in Spain I own stay the same as well. The personal allowances we are entitled to are automatically entered by the Renta Web programme. There is nothing the slightest bit complicated about it, although people whose financial affairs are more complex might well want an accountant or gestor to complete their returns.


If however you do receive the black envelope you will need to explain everything and at least if it was done by a professional Spanish gestor they will do that all for you. There is no way I could deal with the hacienda when I was investigated- the letter alone was 4 pages of very formal technical Spanish relating t o various amounts of money they had discovered via HMRC and my bank.


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## Lynn R (Feb 21, 2014)

kaipa said:


> If however you do receive the black envelope you will need to explain everything and at least if it was done by a professional Spanish gestor they will do that all for you. There is no way I could deal with the hacienda when I was investigated- the letter alone was 4 pages of very formal technical Spanish relating t o various amounts of money they had discovered via HMRC and my bank.


I would have no problem providing information for an accountant or gestor to answer any queries from AEAT as I have declared all income I have received and I keep everything including bank statements, payslips, P60s and letters from pension providers and also submitted a Spain (Individual) Double Taxation form after which AEAT issued me with a Certificado de Residencia Fiscal en España (Convenio) so they must have been satisfied with the information I was providing. And I did that form myself as well, having been quoted €250 by an accountant to do it which I thought was ridiculous as it was by no means a very complex form.

I have seen so many people saying they have been investigated or had to pay fines after having their returns completed by gestors that it does not seem to be any kind of guarantee that the returns they submit will be correct.

However, in the not too distant future I will need to submit a Modelo 720 and will use an accountant for that as I would not attempt it and it is not something that, for me at least, should need to be redone periodically.


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## kaipa (Aug 3, 2013)

Most decent assessors will deal with the hacienda if they completed your forms that is why it is worth paying them. Mine wasnt incorrectly done it was hacienda assuming I had residency in 2016 which I didn't and this prompted them to investigate me. If I hadn't had it done by my lawyer and his gestor I would no doubt have had a pretty stressful time and expense responding to emails and possibly a meeting in Alicante. Basically I dont t see the point in penny pinching by filling in a form that I in all honesty dont have higher enough Spanish to really understand. But each to their own


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## Lynn R (Feb 21, 2014)

kaipa said:


> Most decent assessors will deal with the hacienda if they completed your forms that is why it is worth paying them. Mine wasnt incorrectly done it was hacienda assuming I had residency in 2016 which I didn't and this prompted them to investigate me. If I hadn't had it done by my lawyer and his gestor I would no doubt have had a pretty stressful time and expense responding to emails and possibly a meeting in Alicante. Basically I dont t see the point in penny pinching by filling in a form that I in all honesty dont have higher enough Spanish to really understand. But each to their own


So what is preventing someone filling in their own return and then engaging an accountant to help them deal with any queries or investigations by AEAT should they arise (at a cost, naturally)? Aren't you the one usually banging on about most British people in Spain not speaking Spanish and being able to deal with their own affairs, unlike yourself?. It's not about penny pinching, it's about not feeling like a helpless child in the country I live in and being able, so far as possible, to operate independently as I would if I were still living in my country of birth.

In the year after we became tax resident in Spain I made an appointment at Hacienda so I could put in a zero tax return and went to see them (not with an interpreter or using a gestor). At that time I didn't have any income as my pensions would not start for several years, and was living off savings. It wasn't hard, and they weren't interested in seeing any of the things such as bank statements which I'd taken with me, thinking I'd have to account for every penny. They were very pleasant and helpful about it, and told me I wasn't required to make any returns until I started to receive an income. That was 14 years ago now and there have never been any queries about why returns were not submitted for the intervening years.


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## kaipa (Aug 3, 2013)

Like I say each to their own.


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## Lynn R (Feb 21, 2014)

[/QUOTE]


kaipa said:


> Like I say each to their own.


It is a pity you didn't take that view from the start instead of making disparaging (and not even true) remarks like

"The Brits mistakenly think it is the same as the uk tax self assessment form ( which is very user friendly) the modelo 100 is not at all user friendly."


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## alex T. (10 mo ago)

kaipa said:


> Yes, dont get excited- Spain doesnt have to implement it and in fact a similar ruling was made years ago but the 720 and the fines still exist.


This court case would just does
away with fines, correct? It doesn't do away with having to declare assets abroad, correct?


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## kaipa (Aug 3, 2013)

That's correct. You still must declare your foreign assests and you are still fined for providing incorrect information it is just the severity of the fine was declared unjust. I think the fines now correspond to those used in normal taxation.


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## Barriej (Jul 23, 2012)

kaipa said:


> That's correct. You still must declare your foreign assests and you are still fined for providing incorrect information it is just the severity of the fine was declared unjust. I think the fines now correspond to those used in normal taxation.


When I gave the accountant the details to submit our first one this year.
I asked why it was required and he said (through the translator, who is our solicitor).
Its so they can check that you have declared what they already know. 
He then smiled and said that unless you come from a country where they refuse to share information, you would be surprised what governments and other official bodies can find out about you. And they don't even need your permission


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## dancingspider (Mar 4, 2018)

kaipa said:


> That's correct. You still must declare your foreign assests and you are still fined for providing incorrect information it is just the severity of the fine was declared unjust. I think the fines now correspond to those used in normal taxation.


My understand also is that we will have to continue doing the 720, but will no longer be subject to the huge fines.


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## kaipa (Aug 3, 2013)

Remember you only need to repeat it if your assests increase by 20,000 €. So you might not need to do more than. My accountant said it was primarily designed as a way of trying to combat money laundering ( hence the eye- watering fines) but that now its merely seen as a way of checking you are not hiding money that is taxable


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## MataMata (Nov 30, 2008)

That's not true, you also need to do if you sell or purchase assets during the year.

Remember it's a declaration of foreign assets held on Dec 31st. and they can change.


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## Joppa (Sep 7, 2009)

MataMata said:


> That's not true, you also need to do if you sell or purchase assets during the year.


That includes closing an account with zero balance, or it's a time-limited account and balance is transferred to a new account. Or you just open another account.


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## MataMata (Nov 30, 2008)

Essentially any change in what you declared last time triggers a new 720


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## dancingspider (Mar 4, 2018)

MataMata said:


> Essentially any change in what you declared last time triggers a new 720


That is ambiguous!

The rules which require resubmission are clear!


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