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(The following statement was released by the rating agency) Link to Fitch Ratings' Report: Institutional Framework for German Subnationals www.fitchratings.com">www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=729278">https://www.fitchratings.com">www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=729278 FRANKFURT/MOSCOW/LONDON, September 11 (Fitch) Fitch Ratings says in a new report that the institutional framework for German states (Laender) and municipalities is strong, supportive and ensures financial transparency. Fitch believes that the institutional framework effectively regulates the local and regional governments (LRGs) responsibilities as well as their funding sources and the relationship between them and with the central government (the Bund). While the Laender face fairly low fiscal flexibility they receive from the Bund a large part of common taxes (personal income tax, corporate income tax, VAT and withholding tax), together accounting for 70% of the tax proceeds of the entire sector. Municipalities also have some leeway on their business taxes, which represented 46% of their total tax revenue in 2014. The Laender and, to a lesser extent, the municipalities benefit from a strong and far-reaching financial equalisation system, which aims to balance out the financial disparities between them. This is achieved through sharing VAT and other taxes among the Laender, and additional federal transfers to the weaker states. The LRGs are required to publish a budget and an execution report together with a medium term financial plan. Although most of the Laender publish this information on their respective web pages, this is not yet common practice for all municipalities. The aggregate data for the sector is available on the Federal Ministry of Finance's and on the German Statistical Office's website. Laender's budgets are usually based on cash accounting while municipalities have adopted accrual accounting. The report entitled "Institutional Framework for German Subnationals" is available at www.fitchratings.com">www.fitchratings.com or by clicking the link above. Contact: Guido Bach Senior Director +49 69 76 80 76 111 Fitch Deutschland GmbH Neue Mainzer Strasse 46-50 D - 60311 Frankfurt am Main Nilay Akyildize Director +49 69 76 80 76 134 Dorota Dziedzic Director +48 22 338 62 96 Media Relations: Peter Fitzpatrick, London, Tel: +44 20 3530 1103, Email: peter.fitzpatrick@fitchratings.com. Additional information is available on www.fitchratings.com">www.fitchratings.com ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.