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Kleinwalsertal (little Walser valley) is a part of Austria, but only accessible from Germany to the north, and thus is an Austrian "practical exclave" or "pene-exclave". It used to have special tax free status which became obsolete when Austria acceded to the EU.
It is a commune of the state Vorarlberg which is the most western state of Austria. It consists of three villages which are situated along the River Breitach: Mittelberg, Hirschegg, and Riezlern.
The valley is famous in Central Europe as a ski and hiking resort. The 5,000 inhabitants, who are called "Walser", provide 12,000 beds for tourists.
Due to the terrain there is no direct access by car to the other parts of Austria. Therefore the Kleinwalsertal can only be accessed via Oberstdorf, a nearby village in Germany.
From 1891 Kleinwalsertal enjoyed a customs union with Germany, a free border, and used the Deutsche Mark. Since Austria joined the European Union in 1995, followed by the signing of the Schengen Agreement (1997) and the introduction of the Euro (2002), this special status no longer applies.