Using Swiss Bank and Taxes

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Topic Author
900
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Using Swiss Bank and Taxes

Post by 900 »

Hello,
I have a portfolio at Interactive Brokers and I want to divide my assets to another stable country, that's why I want to open an account with UBS Switzerland. It will be a €2M portfolio.

They're offering several services under their wealth management division and I'm only interested in custody service since I want to go with a low cost, passive 50-50 portfolio(something like VWRA + AGGU).

I'm definitely not going to buy my assets via UBS because their fees are sky-high like other top tier Swiss banks. For example: If you want to buy €500K LSE exchanged ETF then you need to pay 1.35% + 0.15% Swiss stamp tax. That's why I am planning to buy my assets(IE domiciled, low-cost index ETFs) via IB and transfer to UBS Switzerland.

I can able to avoid transaction fees + stamp tax, If I buy my assets via IB US and transfer to UBS. I need to pay only the UBS custody fee which is again high but there is a cost for everything. What do you think about this setup? Do I miss any extra fees(or Swiss taxes)?

Thanks
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whodidntante
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Re: Using Swiss Bank and Taxes

Post by whodidntante »

Besides being a citizen of the world, are you a US citizen or another person who has to pay US income taxes? If so, read up on PFIC and prepare to face palm. :oops:
Topic Author
900
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Re: Using Swiss Bank and Taxes

Post by 900 »

whodidntante wrote: Mon Aug 31, 2020 9:34 am Besides being a citizen of the world, are you a US citizen or another person who has to pay US income taxes? If so, read up on PFIC and prepare to face palm. :oops:
Sorry for not mentioning. I'm a NON-US / NON-EU citizen and resident of UAE(no income tax).
Tylenol Jones
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Re: Using Swiss Bank and Taxes

Post by Tylenol Jones »

Why don't you go with swissquote? They are Swiss and just bought Internaxx. They also have UAE branch https://www.swissquote.ae/

If you really want to go with a pure Swiss bank then look into some of the truly stable Swiss banks such as ZKB. I think UBS is just like all these other international banks.
Topic Author
900
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Re: Using Swiss Bank and Taxes

Post by 900 »

Tylenol Jones wrote: Tue Sep 01, 2020 1:28 am Why don't you go with swissquote? They are Swiss and just bought Internaxx. They also have UAE branch https://www.swissquote.ae/

If you really want to go with a pure Swiss bank then look into some of the truly stable Swiss banks such as ZKB. I think UBS is just like all these other international banks.
I have a SwissQuote account. Here is the quick comparison:

- In terms of assets Swissquote is the 55th largest bank in Switzerland and UBS is the 1st.
- SQ is a new bank, they're 20 years old. UBS is 158 years old.
- UBS has A+ credit rating. Swissqoute doesn't have any credit rating.

I don't think SQ's safety level comparable with UBS or Credit Suisse but I am not saying SQ is bad. Their infrastructure is pretty good especially their mobile app. I used them as my current account and worked very well.

I will call ZKB but as far as I know, it is a Cantonal bank and they are not interested in non-resident customers.
megatron1911
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Re: Using Swiss Bank and Taxes

Post by megatron1911 »

Maybe there's a misconception here.

- what do you mean by "custody"? If you buy ETFs, the custodians of those funds are NOT the bank you have your depot with. UBS would hold them at the custodian bank in their name in a seggregated account. Somebody correct me if I'm wrong.

- no matter whether I'm wrong or not: if the ETFs you buy engage in securities lending, then the whole thing doesn't matter anyway when push comes to shove. And push comes to shove is the kind of scenario we're talking about. It would make no difference whether you bank with UBS or a cheap online-broker.

(- btw: UBS hat to be bailed out 2008; as opposed to SQ)

- A bank like UBS might be interesting as a regional hedge for general banking services and the possibility of accessing products (private equite, alts, hedge funds, special derivatives etc) you wouldn't otherwise be able to access, though.
Topic Author
900
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Re: Using Swiss Bank and Taxes

Post by 900 »

@megatron1911
I am not an expert about custody details but as far as I know lots of brokers(for ex: IB) not holding your assets in your name. In case of any fraud caused caused by broker, it can be a problem. It is a very unlikely situation but still possible also I don't buy ETFs with securities lending.

Yes UBS bailed out, actually, that's why I want to open an account with them because they are considered too big to fail like Citibank, JPMorgan, BoA, Wells Fargo etc.... The government most probably recover them in case of any problem. This will be another layer of safety.
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Stef
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Re: Using Swiss Bank and Taxes

Post by Stef »

Are 0.35% custody fees really worth it?
Valuethinker
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Re: Using Swiss Bank and Taxes

Post by Valuethinker »

[edited]

I think I was getting into the far-fetched.

The way to think about it is as an insurance premium costing 0.35% pa
Last edited by Valuethinker on Tue Sep 08, 2020 10:44 am, edited 1 time in total.
Topic Author
900
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Re: Using Swiss Bank and Taxes

Post by 900 »

Stef wrote: Tue Sep 08, 2020 5:50 am Are 0.35% custody fees really worth it?
I think you're a Swiss resident. The custody fee is 0.55% for foreigners at UBS :x
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Stef
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Re: Using Swiss Bank and Taxes

Post by Stef »

911 wrote: Tue Sep 08, 2020 10:18 am
Stef wrote: Tue Sep 08, 2020 5:50 am Are 0.35% custody fees really worth it?
I think you're a Swiss resident. The custody fee is 0.55% for foreigners at UBS :x
Oh, didn't know that, damn. Yes I am.

Did you check Postfinance?
Topic Author
900
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Re: Using Swiss Bank and Taxes

Post by 900 »

Stef wrote: Tue Sep 08, 2020 10:33 am
911 wrote: Tue Sep 08, 2020 10:18 am
Stef wrote: Tue Sep 08, 2020 5:50 am Are 0.35% custody fees really worth it?
I think you're a Swiss resident. The custody fee is 0.55% for foreigners at UBS :x
Oh, didn't know that, damn. Yes I am.

Did you check Postfinance?
Postfinance doesn't accept foreign investors. I can go with UBS, Credit Suisse except small banks like Lombard Odier, Julius Baer. I started the KYC process with UBS. I will try to make some bargain after some threshold. It looks like the this is the safest way with a price.
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Stef
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Re: Using Swiss Bank and Taxes

Post by Stef »

We are talking about 2M right? Start negotiating the fees before you transfer the assets. I think you could get it down to 0.25-0.35%.
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galeno
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Re: Using Swiss Bank and Taxes

Post by galeno »

Our 40 years of investing has been an exercise of slowly but steadily decreasing portfolio investment costs. As non US investors.

We started at our local bank investing in "funds". We were easily paying 3% plus. Probably more. I hate to think about it. 40 years later those costs are down to 0.28%.

Our port has lived in Costa Rica, Bermuda, Cayman Islands and the USA. Its traveling clothes have been Costa Rican, Panamanian, and soon to be BVI.

It took us 34 years to free ourselves from US domiciled financial assets to FINALLY be able to invest like American Bogleheads.
KISS & STC.
megatron1911
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Re: Using Swiss Bank and Taxes

Post by megatron1911 »

900 wrote: Tue Sep 08, 2020 5:27 am @megatron1911
I am not an expert about custody details but as far as I know lots of brokers(for ex: IB) not holding your assets in your name. In case of any fraud caused caused by broker, it can be a problem. It is a very unlikely situation but still possible also I don't buy ETFs with securities lending.

Yes UBS bailed out, actually, that's why I want to open an account with them because they are considered too big to fail like Citibank, JPMorgan, BoA, Wells Fargo etc.... The government most probably recover them in case of any problem. This will be another layer of safety.
Maybe there is a bit of a misconception about this here. Only because a bank is a GSIB doesn't mean you're safe. As a matter of fact, bail-in rules apply to that kind of bank too. What is going to be "saved" in the event of a crash are the systemically relevant parts of the bank. It can be assumed that everything above the threshold of CHF 100.000 (?) is not part of this picture. Never forget that your cash isn't really cash yours when it's in a bank. It is an IOU. You become a creditor of the bank.

Anyway, if you just keep your securities with them, you'd be fine, no matter what.
LarryCarell
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Re: Using Swiss Bank and Taxes

Post by LarryCarell »

Please let us know what your fees will be. I switched from swiss bank to IB. It doesnt feel safe, even though logically it is as safe as possible with IB. I would prefer to stay in swiss bank, but cant get my head around paying 0,4% annual fee just for holding securities with them. not right, does not make any sense.
ivk5
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Re: Using Swiss Bank and Taxes

Post by ivk5 »

OP I don’t see what problem you’re trying to solve or why you think UBS will solve it. If I were in your place I'd stick with IB.

I’m a CH resident, no experience with taxes on investments of non-residents.
Hustlinghustling
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Re: Using Swiss Bank and Taxes

Post by Hustlinghustling »

fyi I have a UBS Singapore account and pay 0.15% custody
Topic Author
900
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Re: Using Swiss Bank and Taxes

Post by 900 »

megatron1911 wrote: Thu Sep 10, 2020 2:17 am Maybe there is a bit of a misconception about this here. Only because a bank is a GSIB doesn't mean you're safe. As a matter of fact, bail-in rules apply to that kind of bank too. What is going to be "saved" in the event of a crash are the systemically relevant parts of the bank. It can be assumed that everything above the threshold of CHF 100.000 (?) is not part of this picture. Never forget that your cash isn't really cash yours when it's in a bank. It is an IOU. You become a creditor of the bank.

Anyway, if you just keep your securities with them, you'd be fine, no matter what.
Of course GSIB doesn't mean I'm 100% safe but as I mentioned before there is a bailout possibility in case of fail and GSIB insititions regulated more strictly.
LarryCarell wrote: Thu Sep 10, 2020 5:11 pm Please let us know what your fees will be. I switched from swiss bank to IB. It doesnt feel safe, even though logically it is as safe as possible with IB. I would prefer to stay in swiss bank, but cant get my head around paying 0,4% annual fee just for holding securities with them. not right, does not make any sense.
Sure. KYC process for opening account still ongoing. I don't think IB is a risky institution but it is not safe as Charles Schwab or Fidelity. There is a insurance up to $500k(for US domiciled IB accounts). If you're going to invest something more than $1M then it is better to use multiple brokers.
ivk5 wrote: Fri Sep 11, 2020 3:26 am OP I don’t see what problem you’re trying to solve or why you think UBS will solve it. If I were in your place I'd stick with IB.

I’m a CH resident, no experience with taxes on investments of non-residents.
My portfolio at IB will stay but I don't want to put my all eggs into the same bucket that's why looking for safe institution for my upcoming investments.
Hustlinghustling wrote: Fri Sep 11, 2020 5:28 am fyi I have a UBS Singapore account and pay 0.15% custody
It is interesting because this is even lower than CH residents' pricing. As far as I know there is no UBS retail banking division at Singapore. Is this wealth management account?
Hustlinghustling
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Re: Using Swiss Bank and Taxes

Post by Hustlinghustling »

900 wrote: Fri Sep 11, 2020 12:22 pm
Hustlinghustling wrote: Fri Sep 11, 2020 5:28 am fyi I have a UBS Singapore account and pay 0.15% custody
It is interesting because this is even lower than CH residents' pricing. As far as I know there is no UBS retail banking division at Singapore. Is this wealth management account?
Yes it is WM account. I am not a singapore resident either. I am aware this can be lowered even further on negotiation with larger balances. custody fees in private banks in Asia typically lower due to aggressive competition. I should add the standard rate in their official documents for UBS Sg is 0.3% custody but I have negotiated that down by half without much difficulty.

Note it is regulated by Singapore monetary authority of course and not a swiss account in that sense, whether that is what you needed or not.
Last edited by Hustlinghustling on Fri Sep 11, 2020 9:38 pm, edited 1 time in total.
Hustlinghustling
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Re: Using Swiss Bank and Taxes

Post by Hustlinghustling »

LarryCarell wrote: Thu Sep 10, 2020 5:11 pm Please let us know what your fees will be. I switched from swiss bank to IB. It doesnt feel safe, even though logically it is as safe as possible with IB. I would prefer to stay in swiss bank, but cant get my head around paying 0,4% annual fee just for holding securities with them. not right, does not make any sense.
Personally I do not keep > 15% of my assets with IB or any securities brokerage. Peace of mind on counterparty risk is just as important to me as market risk. MF Global wasn’t that long ago and while the investors were made whole in the end it still took years.
LarryCarell
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Re: Using Swiss Bank and Taxes

Post by LarryCarell »

Hustlinghustling wrote: Fri Sep 11, 2020 9:26 pm
LarryCarell wrote: Thu Sep 10, 2020 5:11 pm Please let us know what your fees will be. I switched from swiss bank to IB. It doesnt feel safe, even though logically it is as safe as possible with IB. I would prefer to stay in swiss bank, but cant get my head around paying 0,4% annual fee just for holding securities with them. not right, does not make any sense.
Personally I do not keep > 15% of my assets with IB or any securities brokerage. Peace of mind on counterparty risk is just as important to me as market risk. MF Global wasn’t that long ago and while the investors were made whole in the end it still took years.
and how much it costs you to hold securities elsewhere?
Hustlinghustling
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Re: Using Swiss Bank and Taxes

Post by Hustlinghustling »

LarryCarell wrote: Sat Sep 12, 2020 4:08 am
Hustlinghustling wrote: Fri Sep 11, 2020 9:26 pm
LarryCarell wrote: Thu Sep 10, 2020 5:11 pm Please let us know what your fees will be. I switched from swiss bank to IB. It doesnt feel safe, even though logically it is as safe as possible with IB. I would prefer to stay in swiss bank, but cant get my head around paying 0,4% annual fee just for holding securities with them. not right, does not make any sense.
Personally I do not keep > 15% of my assets with IB or any securities brokerage. Peace of mind on counterparty risk is just as important to me as market risk. MF Global wasn’t that long ago and while the investors were made whole in the end it still took years.
and how much it costs you to hold securities elsewhere?
Spread out over a few banks ranging in custody fee from free to 0.15%/annum
Topic Author
900
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Re: Using Swiss Bank and Taxes

Post by 900 »

I want to share the latest update regarding my situation.

We opened my UBS bank and custodian account in Zurich. I did a little negotiation with them. They reduced securities transaction fees to 0.14%(for CHF 1M+ above transactions) and custodian fees to 0.55%. I know it is still high but I'm trying to find the safest option. I will try to negotiate again once my portfolio reaches 2M and worst can transfer my positions to Credit Suisse their custodian %30-40 cheaper.
LarryCarell
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Re: Using Swiss Bank and Taxes

Post by LarryCarell »

so high it is crazy..
Topic Author
900
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Re: Using Swiss Bank and Taxes

Post by 900 »

LarryCarell wrote: Mon Oct 19, 2020 1:06 pm so high it is crazy..
Unfortunately, it is very expensive but for high amounts, I couldn't find a better solution for the best safety.

If you're going to invest 500k then you can use any US broker since there is 500k insurance and you will pay very low custodian fees or you can open 2-3 different brokers to increase insurance amount but it is not do-able for high amounts.

There are some other options in Switzerland but none of them cheap for the custodian. For example Lombard Odier 0.30%, Julius Baer 0.35%.
Hustlinghustling
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Re: Using Swiss Bank and Taxes

Post by Hustlinghustling »

Just curious, why not the UBS Singapore option where it's 0.15%? The Switzerland domicile is worth that much more for you?
DJN
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Re: Using Swiss Bank and Taxes

Post by DJN »

Hi,
why are you considering paying a custody fee to a Swiss bank for holding assets that are already held in a depositary somewhere else if you invest via a platform?
In addition a foreigner who holds any cash in a Swiss bank has to pay annual charges for that privilege.
Nothing but nothing is without fees applicable in Swizzerland.
DJN
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assyadh
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Re: Using Swiss Bank and Taxes

Post by assyadh »

DJN wrote: Tue Oct 20, 2020 10:44 am Hi,
why are you considering paying a custody fee to a Swiss bank for holding assets that are already held in a depositary somewhere else if you invest via a platform?
In addition a foreigner who holds any cash in a Swiss bank has to pay annual charges for that privilege.
Nothing but nothing is without fees applicable in Swizzerland.
DJN

Diversification is key
Topic Author
900
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Re: Using Swiss Bank and Taxes

Post by 900 »

Hustlinghustling wrote: Tue Oct 20, 2020 9:25 am Just curious, why not the UBS Singapore option where it's 0.15%? The Switzerland domicile is worth that much more for you?
As far as I know there is no seperate entity called UBS Singapore. It is branch of UBS and it is available to Singapore residents.
DJN wrote: Tue Oct 20, 2020 10:44 am Hi,
why are you considering paying a custody fee to a Swiss bank for holding assets that are already held in a depositary somewhere else if you invest via a platform?
Can you give me more information about this? Do you say custodian account is not important for safety?
DJN wrote: Tue Oct 20, 2020 10:44 am In addition a foreigner who holds any cash in a Swiss bank has to pay annual charges for that privilege.
Nothing but nothing is without fees applicable in Swizzerland.
DJN
I don't think it is true. You can deposit cash to any Swiss bank as a foreigner without paying any fee. If you're talking about EURO currency, then of course there are some negative interest rates for the high amounts but this is not related with Swiss banks. Almost all high credit rating banks apply negative rates for EURO because of European Central Bank's interest rate.
DJN
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Re: Using Swiss Bank and Taxes

Post by DJN »

900 wrote: Wed Oct 21, 2020 2:52 am
DJN wrote: Tue Oct 20, 2020 10:44 am Hi,
why are you considering paying a custody fee to a Swiss bank for holding assets that are already held in a depositary somewhere else if you invest via a platform?
Can you give me more information about this? Do you say custodian account is not important for safety?
If you buy an asset such as a fund through a platform, the ownership is with you and the platform is obliged under EU law to hold the asset via depositary such as Northern Trust or Citi etc. UBS aren't really doing anything that I can see, maybe you can clarify.
DJN wrote: Tue Oct 20, 2020 10:44 am In addition a foreigner who holds any cash in a Swiss bank has to pay annual charges for that privilege.
Nothing but nothing is without fees applicable in Swizzerland.
DJN
I don't think it is true. You can deposit cash to any Swiss bank as a foreigner without paying any fee. If you're talking about EURO currency, then of course there are some negative interest rates for the high amounts but this is not related with Swiss banks. Almost all high credit rating banks apply negative rates for EURO because of European Central Bank's interest rate.
This is the case with the main Swiss banks, I know this from my own experience, with Credit Suisse. CHF700 for an account with zero balance! Similar for an account with a positive balance.
DJN
Yah shure. | Have a look at the Bogleheads Wiki in the first instance.
Hustlinghustling
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Re: Using Swiss Bank and Taxes

Post by Hustlinghustling »

900 wrote: Wed Oct 21, 2020 2:52 am
Hustlinghustling wrote: Tue Oct 20, 2020 9:25 am Just curious, why not the UBS Singapore option where it's 0.15%? The Switzerland domicile is worth that much more for you?
As far as I know there is no seperate entity called UBS Singapore. It is branch of UBS and it is available to Singapore residents.
No, it is an entity of UBS Wealth Management domiciled in Singapore that isn't exclusive to it's residents. I have such an account as one who has no resident nexus there. They won't open accounts for Americans though. Main difference with the Zurich UBS account is the governing monetary authority. But if you're just after the safety of a UBS account, then there are cheaper options is all I'm pointing out.
https://www.ubs.com/sg/en/wealth-management.html

On a 2mil portfolio, that's 8000 USD a year difference on the custody fees. adds up fast!
Topic Author
900
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Re: Using Swiss Bank and Taxes

Post by 900 »

DJN wrote: Wed Oct 21, 2020 6:17 am This is the case with the main Swiss banks, I know this from my own experience, with Credit Suisse. CHF700 for an account with zero balance! Similar for an account with a positive balance.
DJN
Very interesting. UBS charging me 60 CHF per year for the account fee also I have a Swissqoute current account and it is completely free. I don't know which type of account you have with CS because some account types have high fees even you don't use it(for ex UBS custodian account costs minimum 1600 CHF p.a.)

DJN wrote: Wed Oct 21, 2020 6:17 am If you buy an asset such as a fund through a platform, the ownership is with you and the platform is obliged under EU law to hold the asset via depositary such as Northern Trust or Citi etc. UBS aren't really doing anything that I can see, maybe you can clarify.
I agree, in practice, it is like you said but what do you think about the MF Global scandal?

https://www.reuters.com/article/us-mfgl ... LG20111101

Hustlinghustling wrote: Wed Oct 21, 2020 8:50 am No, it is an entity of UBS Wealth Management domiciled in Singapore that isn't exclusive to it's residents. I have such an account as one who has no resident nexus there. They won't open accounts for Americans though. Main difference with the Zurich UBS account is the governing monetary authority. But if you're just after the safety of a UBS account, then there are cheaper options is all I'm pointing out.
https://www.ubs.com/sg/en/wealth-management.html

On a 2mil portfolio, that's 8000 USD a year difference on the custody fees. adds up fast!
Thanks, I will check this with UBS and maybe I can request a transfer of my custodian account to Singapore UBS.
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