You have to do the following steps:

1. Run defrag in the guest (Windows only)
2. Nullify free space:

   With a Linux Guest run this:
   

   sudo dd if=/dev/zero of=/bigemptyfile bs=4096k sudo rm -rf /bigemptyfile

   1 2	sudo dd if=/dev/zero of=/bigemptyfile bs=4096k sudo rm -rf /bigemptyfile

   
   With a Windows Guest, download SDelete from Sysinternals and run this:
   
   sdelete –z

   1	sdelete –z

3. Shutdown the guest VM
4. Now run VBoxManage’s modifyhd command with the --compact option:

   With a Linux Host run this:
   

   vboxmanage modifyhd /path/to/thedisk.vdi --compact

   1	vboxmanage modifyhd /path/to/thedisk.vdi --compact

   
   With a Windows Host run this:
   
   VBoxManage.exe modifyhd c:\path\to\thedisk.vdi --compact

   1	VBoxManage.exe modifyhd c:\path\to\thedisk.vdi --compact

   
   With a Mac Host run this:
   
   VBoxManage modifyhd /path/to/thedisk.vdi --compact

   1	VBoxManage modifyhd /path/to/thedisk.vdi --compact

   
   This reduces the vdi size.