Tax Transparency

Our business activities generate a substantial amount and variety of taxes. We pay corporate income taxes, royalties, production taxes, stamp duties, as well as employment and other taxes. In addition, we collect and pay payroll taxes, and indirect taxes such as excise duties and VAT. The taxes we collect and pay represent a significant part of our economic contribution to the countries in which we operate.

Specific Policies and Commitments

At OMV, we are committed to complying with tax laws in a responsible manner and to having open and constructive relationships with tax authorities, which is also reflected in OMV’s public Tax Strategy. Our tax planning supports OMV’s business and reflects our commercial and economic activity. OMV does not engage in aggressive tax planning, which consists of artificial structures put in place merely to save taxes or of transactions lacking economic substance aimed at obtaining undue tax advantages. We comply with applicable tax laws and seek to limit the risk of uncertainty or disputes. We perform transactions between OMV Group companies on an arm’s length basis and in accordance with the OECD principles currently in force.

OMV Group companies are established in suitable jurisdictions, giving consideration to our business activities and the prevailing regulatory environment. OMV does not establish its subsidiaries in countries that do not follow international standards of transparency and exchange of information on tax matters, unless justified by operational requirements in line with OMV’s Code of Business Ethics and our Code of Conduct. The Global Tax Directive is the key internal guidance document governing taxes within the OMV Group.

Management and Due Diligence Processes

Risk Assessments

We continuously carry out risk reviews, which incorporate tax risks, in order to assess our current and future financial and non-financial risks, assess how these trends will impact OMV, and then develop appropriate responses. We report key risks internally at least twice a year to the Supervisory Board through a very clearly defined process. The Executive Board drives OMV’s commitment to the risk management program and sets the tone for a strong culture of risk awareness across the organization.

We follow OMV’s risk management system as part of our internal control processes. We identify, assess, and manage tax risks by implementing risk management measures at the operational level with a robust and complex set of controls and procedures. These guarantee that the correctness of data included in the relevant tax returns, tax payments, and communications with tax authorities is verified in a timely manner. The effectiveness and relevance of these controls and procedures is periodically assessed in order to promptly undertake any necessary mitigation and modifications.

Disclosure

Since 2016, OMV has been providing mandatory disclosures under the Payment to Governments Directive (in accordance with Section 267c of the Austrian Commercial Code) and publishes any payments made to governments in connection with exploration and extraction activities, such as production entitlements, taxes, or royalties, in its consolidated financial statements (for more details, see the Consolidated Report on the Payments Made to Governments in the Annual Report). In addition, OMV reports payments made to public authorities, such as taxes or royalties in connection with exploration and extraction activities, in countries that are members of the Extractive Industries Transparency Initiative (EITI). We also file a country-by-country report (CbCR) for the OMV Group with the Austrian tax authorities. This is carried out in accordance with Action 13 of the OECD’s Base Erosion and Profit Shifting (BEPS) Action Plan. The CbCR is an annual tax return that breaks down key elements of the financial statements by tax jurisdiction. OMV will publish a public country-by-country report in accordance with the requirements of the relevant EU Directive (for more details with respect to the public country-by-country report and reporting deadlines, please refer to the Outlook section below).

2023 Actions

• In September 2022, the Council of the European Union agreed on a framework for an EU-wide windfall tax on profits for fossil fuel companies. The Council Regulation (EU) 2022/1854 introduced a solidarity contribution that was transposed into the local legislation of the Member States by the end of 2022 and applies to 2022 and/or 2023. It represents a contribution of surplus profits of companies operating in the crude petroleum, natural gas, coal, and refinery sectors and is intended to fund relief measures for households and businesses facing high energy prices.
• With the eco-social tax reform having been adopted in Austria, a national CO₂ emissions price was implemented in October 2022. The national CO₂ emissions price applies to defined energy carriers according to defined emissions factors. As an energy provider, OMV will be charged a fixed CO₂ emissions price that will be increased annually until 2026, before a market-based system is put in place. Generally, OMV supports the creation of such economic and socio-political incentives for more climate-friendly behavior; however, we favor the creation of a harmonized, EU-wide system.

Outlook

Taxation as a key steering instrument toward an eco-friendly, green economy is playing a major role in the current initiatives of the EU, OECD member states, and the Austrian government.

• In 2021, the members of the OECD/G20 Inclusive Framework agreed to reform international tax rules by implementing new rules for profit allocation (Pillar One) and establishing a global minimum taxation regime (Pillar Two). In December 2022, the Council of the European Union reached a unanimous agreement to implement the EU Minimum Tax Directive. This Directive (2022/2523) aims to ensure that large groups operating in the EU are taxed at a minimum global effective tax rate of 15% in each country in which those groups have business activities. Member States were obligated to transpose these rules into domestic law by December 31, 2023, and the rules are effective from January 1, 2024.
• In 2021, the European Council, European Parliament, and European Commission reached an agreement on the proposed Public Country-by-Country reporting (CbCR) Directive. Member States were obligated to transpose the Directive into national law by June 2023 and the first reportable year is 2025, with a reporting deadline of the end of 2026.
• In December 2022, the European Commission proposed the VAT in the Digital Age (ViDA) reforms to amend the European Union (EU) Value Added Tax (VAT) system in response to the challenges of digitalization. The mandatory e-invoicing, which should be implemented by January 2028, should help to close the VAT gap. Many other states (e.g., Germany, Romania, etc.) are currently planning to introduce or have already introduced local e-invoicing/reporting requirements that should also strengthen the VAT base and make tax a driver for innovation and growth due to the elimination of manual tasks and automation of invoice processing.
• Currently, only some countries in the EU have adopted a national CO₂ emissions price for transport and buildings. In 2023, a new emissions trading system was created by the European Commission. The EU-wide Emissions Trading System 2 (ETS 2), covering fuel combustion in buildings, road transport, and additional sectors, is a crucial part of the EU’s Fit for 55 package. It will put an absolute cap on emissions, which will decrease in line with a linear reduction factor. Allowances will be distributed exclusively via auctioning. The ETS 2 will be launched by 2027 or 2028, with monitoring and reporting obligations already starting in 2025.
• The fourth quarter of 2023 was the first period when the Carbon Border Adjustment Mechanism (CBAM), the world’s first carbon border tax, entered into force in the European Union. The transitional phase started on October 1, 2023, and applies initially to imports of cement, iron and steel, aluminum, fertilizers, electricity, and hydrogen. The CBAM was designed to level the playing field between EU and third-country producers by putting a carbon price on certain imported products, while phasing out free allocation of emissions allowances to European industry. In the first phase, the CBAM is only about reporting but not yet about paying a CO₂ price.¹ Carbon Border Adjustment Mechanism – FuelsEurope