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We used three-dimensional finite-element modeling in order to study the effect of the microstructure (random, agglomerated, and percolated distributions of inclusions) on the effective permeability of a magnetic composite with incorporation of complex intrinsic properties in a frequency domain. The study includes the effect of the inclusions’ conductivity and eddy currents on the difference in the permeability. The results show a significant effect of inclusions distribution on the effective permeability of the composites for both nonconductive and conductive particles. We further show that in larger agglomerates with well connected conductive particles the eddy currents shield inner particles and significantly increase the imaginary effective permeability. Comparison with our experimental data from a composite with carbonyl iron inclusions showed that the particle agglomeration at small volume fractions gives similar frequency dependence for the effective permeability as in the case of composites with well distributed inclusions at larger volume fraction.