12 – Taxes on income and profit

OMV Aktiengesellschaft forms a tax group in accordance with section 9 of the Austrian Corporate Income Tax Act 1988 (KStG), which aggregates the taxable profits and losses of all the Group’s main subsidiaries in Austria and possibly arising losses of one foreign subsidiary (OMV AUSTRALIA PTY LTD).

Dividend income from domestic subsidiaries is in general exempt from taxation in Austria. Dividends from EU- and EEA-participations as well as from subsidiaries whose residence state has a comprehensive mutual administrative assistance agreement with Austria are exempt from taxation in Austria if certain conditions are fulfilled. Dividends from other foreign investments that are comparable to Austrian corporations, for which the Group holds a 10% investment share or more for a minimum period of one year, are also excluded from taxation at the level of the Austrian parent company.

Change in valuation allowance of deferred taxes for the Austrian tax group was reported in the income statement, except to the extent that the deferred tax assets arose from transactions or events which were recognized outside profit or loss, i.e. in other comprehensive income or directly in equity.

The effective tax rate is the ratio of income tax to profit before tax. The tables hereafter reconcile the effective tax rate and the standard Austrian corporate income tax rate of 25% showing the major influencing factors.

Differing foreign tax rates effects in 2022 mostly relate to subsidiaries operating in tax jurisdictions with high corporate income tax rates (Norway, United Arab Emirates and Libya). Increase in the effects related to differing foreign tax rates as compared to 2021 was mostly due to significant growth in profit before tax of those subsidiaries.

Non-deductible expenses contained mainly losses from fair value changes of financial assets, effects related to deconsolidation of JSC GAZPROM YRGM Development and permanent effects from depreciation, depletion and amortization.

Non-taxable income and tax incentives in 2022 mainly related to non-taxble gains on the sale of the filling station business in Germany. 2021 was predominantly impacted by the gains on the sale of Wisting field and tax incentives in Norway.

Income and expenses related to at-equity accounted investments effects in 2022 were mainly related to share of profit from equity-accounted investments, gains from the sucessful listing of Borouge PLC on ADX (the Abu Dhabi Securities Exchange) and write-up of investment in ADNOC Refining. 2021 was mainly impacted by the share of profit from equity-accounted investments and ADNOC Refining impairment. For further details see Note 16 – Equity-accounted investments.

Effects related to the change in tax rate mainly related to decrease in deferred tax rate for Austrian entities. Based on the Eco Social Tax Reform Act which was adopted by the National Parliament of Austria in January 2022, corporate income tax rate will be decreased from 25% to 24% in 2023 and further to 23% from 2024 onward.

Tax write-downs and write-ups on investments in subsidiaries in 2022 were mainly related to the tax impairment of the investment in JSC GAZPROM YRGM Development.

Change in valuation allowance for deferred taxes was predominately impacted by the increase in valuation allowances on deferred tax assets in Austria. For further details see Note 25 – Deferred Taxes.

Taxes related to previous years in 2022 were mainly related to the effects on the sale of the filling stations business in Germany and effects related to differences between functional currency and tax currency of certain subsidiaries.

Other effects in 2022 included EU solidarity contribution in the amount EUR 90 mn. As a direct consequence to the energy crisis in Europe, regulatory measures like price caps, subsidy schemes and the EU solidarity contribution are being implemented in some of the countries the OMV Group is active in. The Council Regulation (EU) 2022/1854 introduced a solidarity contribution, which was transposed into the local legislation of the Member States by the end of 2022 and is applicable for 2022 and/or 2023. It represents a contribution for surplus profits of companies operating in the crude petroleum, natural gas, coal and refinery sectors and is calculated based on the taxable profits of those companies, as determined under national tax rules, which are above a 20% increase of the average taxable profits generated in the period 2018 to 2021.

Based on the legislation in Austria, it is expected that two Austrian entities of OMV Group will be subject to the solidarity contribution (Energy Crisis Contribution) for the second half of 2022. Romania transposed this regulation via GEO (Government Emergency Ordinance) 186/2022, approved and published in December 2022. This GEO will subsequently follow the Parliamentary approval process, thus may be subject to changes. Based on OMV Petrom 2022 financials and the provisions of this Emergency Ordinance, OMV Petrom is not subject to the EU solidarity contribution for the fiscal year 2022, having less than 75% of its turnover in the defined areas: extraction of crude, extraction of natural gas, extraction of coal and refining business. Also, for OMV Group entities in Germany no solidarity contribution is expected for 2022.