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 2021 mostly related to subsidiaries operating in tax jurisdictions with high corporate income tax rates (Norway, Libya and United Arab Emirates). Increase in the effects related to differing foreign tax rates as compared to 2020 was mostly due to significant increase in profit before tax of those subsidiaries.

Non-deductible expenses contained mainly losses from fair value changes of financial assets and permanent effects from depreciation, depletion and amortization.

Non-taxable income in 2021 mainly related to non-taxble gains on the sale of Wisting field, positive result contribution from equity-accounted investments and tax incentives in Norway. 2020 was predominantly impacted by revaluation and recycling effects related to the previously held 36% interest in Borealis AG, positive result contribution from equity-accounted investments as well as tax incentives in Norway.

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