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Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes |
(16) | Income Taxes
The Company and its subsidiaries file income tax returns in the U.S. federal, and various states and foreign jurisdictions. The Company assessed its uncertain tax positions and determined that it has no material uncertain tax position at December 31, 2021. The components of income before income taxes consist of the following:
|  | Year ended December 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
U.S. operations |  | $ | 34,742 |  |  | $ | 9,577 |  |  | $ | 23,384 |
Foreign operations |  |  | 116,277 |  |  |  | 59,772 |  |  |  | 81,762 |
|  | $ | 151,019 |  |  | $ | 69,349 |  |  | $ | 105,146 |
The provision for current and deferred income tax expense (benefit) consists of the following:
|  | Year ended December 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | 4,825 |  |  | $ | 1,685 |  |  | $ | 3,280 |
State and local |  |  | 518 |  |  |  | 90 |  |  |  | 713 |
Foreign |  |  | 36,164 |  |  |  | 17,024 |  |  |  | 27,412 |
|  |  | 41,507 |  |  |  | 18,799 |  |  |  | 31,405 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 4 |  |  |  | (215 | ) |  |  | (3 | )
State and local |  |  | 11 |  |  |  | 44 |  |  |  | (22 | )
Foreign |  |  | (530 | ) |  |  | 753 |  |  |  | (2,304 | )
|  |  | (515 | ) |  |  | 582 |  |  |  | (2,329 | )
Total income tax expense |  | $ | 40,992 |  |  | $ | 19,381 |  |  | $ | 29,076 |
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:
|  | December 31, |
|  | 2021 |  |  | 2020 |
Net deferred tax assets: |  |  |  |  |  |  |  |
Foreign net operating loss carry-forwards |  | $ | 1,292 |  |  | $ | 360 |
Inventory and accounts receivable |  |  | 4,508 |  |  |  | 1,928 |
Profit sharing |  |  | 3,787 |  |  |  | 2,936 |
Stock option compensation |  |  | 732 |  |  |  | 718 |
Effect of inventory profit elimination |  |  | 5,112 |  |  |  | 4,443 |
Other |  |  | 407 |  |  |  | 910 |
Total gross deferred tax assets, net |  |  | 15,838 |  |  |  | 11,295 |
Valuation allowance |  |  | (3,582 | ) |  |  | (360 | )
Net deferred tax assets |  |  | 12,256 |  |  |  | 10,935 |
Deferred tax liabilities (long-term): |  |  |  |  |  |  |  |
Building expenses |  |  | (1,082 | ) |  |  | — |
Trademarks and licenses |  |  | (2,551 | ) |  |  | (2,894 | )
Unrealized gain on marketable equity securities |  |  | (436 | ) |  |  | — |
Other |  |  | (251 | ) |  |  | — |
Total deferred tax liabilities |  |  | (4,320 | ) |  |  | (2,894 | )
Net deferred tax assets |  | $ | 7,936 |  |  | $ | 8,041 |
Valuation allowances have been provided for deferred tax assets relating to foreign net operating loss carry-forwards and reserves acquired in connection with the acquisition of Interparfums Italia srl, as future profitable operations from certain foreign subsidiaries might not be sufficient to realize the full amount of the deferred tax assets. INTER PARFUMS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2021, 2020 and 2019 (In thousands except share and per share data) No other valuation allowances have been provided as management believes that it is more likely than not that the asset will be realized in the reduction of future taxable income. The Company estimated of the effect of global intangible low-taxed income (“GILTI”) and has determined that it has no tax liability related to GILTI as of December 31, 2021, 2020 and 2019. The Company also estimated the effect of foreign derived intangible income (“FDII”) and recorded a tax benefit of approximately $0.9 million, $0.3 million and $0.9 million as of December 31, 2021, 2020 and 2019, respectively. French Tax Settlement The French authorities had considered that the existence of IP Suisse, a wholly-owned subsidiary of Interparfums SA, does not, in and of itself, constitute a permanent establishment and therefore Interparfums, SA should pay French taxes on all or part of the profits of that entity. In June 2021, a global settlement agreement was reached with the French Tax Authority whereby Interparfums SA paid in December 2021, €2.5 million (approximately $2.9 million) effectively lowering the Lanvin brand royalty rate charged by IP Suisse for the periods from 2017 through 2020. Interparfums SA also agreed to apply the lower rate in 2021 through 2025 and to transfer the Lanvin brand from IP Suisse to Interparfums, SA by December 31, 2025. The Company is no longer subject to U.S. federal, state, and local income tax examinations by tax authorities for years before 2017. Differences between the United States federal statutory income tax rate and the effective income tax rate were as follows:
|  | Year ended December 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
Statutory rates |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 21.0 | %
State and local taxes, net of Federal benefit |  |  | 0.3 |  |  |  | 0.2 |  |  |  | 0.6 |
Windfall benefit from exercise of stock options |  |  | (0.9 | ) |  |  | (0.6 | ) |  |  | (0.7 | )
Benefit of Foreign Derived Intangible Income |  |  | (0.6 | ) |  |  | (0.4 | ) |  |  | (0.9 | )
Effect of foreign taxes greater than |  |  |  |  |  |  |  |  |  |  |  |
U.S. statutory rates |  |  | 7.4 |  |  |  | 7.5 |  |  |  | 7.5 |
Other |  |  | (0.1 | ) |  |  | 0.2 |  |  |  | 0.1 |
Effective rates |  |  | 27.1 | % |  |  | 27.9 | % |  |  | 27.6 | %
INTER PARFUMS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2021, 2020 and 2019 (In thousands except share and per share data)

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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