@olivierlambert @florent thank you for the suggestions.
So far I have attempted to do the following:

Remote backup to NFS Remote backup to NFS target which is connected to another storage server using iSCSI Move the VM from one SR to another (on a completely different pool) Copy the VM to another pool

Unfortunately, my VM size is not reducing.

@florent said in Backup size larger than it should be:

thin mode doesn't allocate space that is not needed. But once allocated, they stays there.

This looks like an answer to me.
In the worst-case scenario, I will have to recreate the VM and copy the data onto it