ovirt-engine intentionally blocks sparsifying QCOW images since 4.4.4 because it confused users that didn't see the right amount of free space afterwards, see the following bug for more details:
https://bugzilla.redhat.com/show_bug.cgi?id=1792905

On Thu, Jan 12, 2023 at 3:03 PM <andreas_nikiforou@hotmail.com> wrote:
Unfortunately yes, even VM's/disks on the NFS data domain are giving the same error.

Just to be sure, i just created a completely new NFS data share on Truenas imported the data domain to ovirt and created a new test vm with 2 thin provisioned disks on it, cannot sparsify neither:

"Error while executing action: Cannot sparsify Virtual Disk. Sparsifying is not supported for QCOW2 disk testvm3_Disk1."

I checked the NFS share on Truenas to make sure i have a sparse qcow2 file and it is:

-rw-rw---- 1 vdsm ovirt-kvm  24G Jan 12 12:57 a0f82c8b-d2aa-442b-b28b-b25ca684dd7b
-rw-rw---- 1 vdsm ovirt-kvm 1.0M Jan 12 12:44 a0f82c8b-d2aa-442b-b28b-b25ca684dd7b.lease
-rw-r--r-- 1 vdsm ovirt-kvm  307 Jan 12 12:44 a0f82c8b-d2aa-442b-b28b-b25ca684dd7b.meta
root@truenas[.../29dcdef7-8d1d-48bc-b9cf-3850102ec251]# file a0f82c8b-d2aa-442b-b28b-b25ca684dd7b
a0f82c8b-d2aa-442b-b28b-b25ca684dd7b: QEMU QCOW2 Image (v3), 26843545600 bytes
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