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Income tax expense (Tables)

12 Months Ended

Dec. 31, 2020

Major Components Of Tax Expense Income [Abstract]

Italian companies are subject to two enacted income taxes at the following rates:

	2020			2019			2018
IRES (state tax)		24.00	%		24.00	%		24.00	%
IRAP (regional tax)		4.82	%		4.82	%		4.82	%

Summary of Total Income Taxes

Total income taxes for the years ended December 31, 2020, 2019 and 2018 are allocated as follows:

	2020			2019			2018
Current:
- Domestic		(2,221	)		(585	)		(4,504	)
- Foreign		(1,545	)		(1,400	)		(3,052	)
Total (a)		(3,766	)		(1,985	)		(7,556	)
Deferred:
- Domestic		430			(387	)		270
- Foreign		(1,005	)		37			(143	)
Total (b)		(575	)		(350	)		127
Total (a + b)		(4,341	)		(2,335	)		(7,429	)

Summary of Consolidated Profit (Loss) Before Income Taxes and Non-Controlling Interest

Consolidated profit/(loss) before income taxes and Non-controlling interests of the consolidated statement of profit or loss for the years ended December 31, 2020, 2019 and 2018, is analysed as follows:

	2020			2019			2018
Domestic		(17,049	)		(24,808	)		40,822
Foreign		(3,516	)		(6,537	)		(274	)
Total		(20,565	)		(31,345	)		40,548

Reconciliation of Income Tax Expense

The effective income taxes differ from the expected income tax expense (computed by applying the IRES state tax, which is 24% for 2020, 2019 and 2018, to income before income taxes and Non-controlling interests) as follows:

	2020			2019			2018
Expected tax benefit (expense) at statutory tax rates		4,936			7,523			(9,732	)
Effect of:
- Tax exempt income		4,806			3,297			1,665
- Aggregate effect of different tax rates in foreign jurisdictions		322			(139	)		208
- Italian regional tax		(24	)		(78	)		(46	)
- Non-deductible expenses		(5,575	)		(4,521	)		(2,667	)
- Tax effect on unremitted earnings		(1,024	)		(430	)		(1,252	)
- Non taxable gain from disposal and loss of control of a subsidiary		—			—			17,193
- Chinese withholding tax on income not recoverable		(1,396	)		(139	)		(4,458	)
- Effect of net change in deferred tax assets unrecognised		(6,386	)		(7,848	)		(8,340	)
Actual tax charge		(4,341	)		(2,335	)		(7,429	)

Summary of Deferred Tax Assets and Liabilities

The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities as at December 31, 2020 and 2019 are presented below:

Deferred tax assets	31/12/20		31/12/19
Intercompany profit on inventories		1,278		59
Provision for contingent liabilities		379		677
Inventories obsolescence		354		297
Deferred costs		—		845
Other temporary differences		12		96
Total deferred tax assets		2,023		1,974

Deferred tax liabilities	31/12/20			31/12/19
Withholding tax on unremitted earnings of subsidiaries		(1,024	)		(430	)
Deferred revenue (IFRS 15)		(984	)		(934	)
Unrealised net gains on foreign exchange rate		(376	)		(396	)
Other temporary differences		(131	)		(131	)
Total deferred tax liabilities		(2,515	)		(1,891	)

Summary of Movements in deferred Tax Balances

Movements in deferred tax balances occurred during 2018, 2019 and 2020 are analysed as follows:

	Def. tax assets			Def. tax liabilities			Total
Balance as at December 31, 2017		2,656			(2,350	)		306
Recognised in profit or loss		(629	)		756			127
Recognised in OCI		—			—			—
Recognised directly in equity		—			—			—
Balance as at December 31, 2018		2,027			(1,594	)		433
Recognised in profit or loss		(53	)		(297	)		(350	)
Recognised in OCI		—			—			—
Recognised directly in equity		—			—			—
Balance as at December 31, 2019		1,974			(1,891	)		83
Recognised in profit or loss		49			(624	)		(575	)
Recognised in OCI		—			—			—
Recognised directly in equity		—			—			—
Balance as at December 31, 2020		2,023			(2,515	)		(492	)

Summary of Reconciliation of Deferred Tax Assets and Liabilities Included in Consolidated Statements of Financial Position

The following tables show the reconciliation of deferred tax assets and deferred tax liabilities with the balances included in the consolidated statements of financial position as at December 31, 2020 and 2019.

	31/12/20			31/12/19
Deferred tax assets		2,023			1,974
Deferred tax liabilities compensated		(1,492	)		(1,461	)
Net deferred tax assets		531			513
Deferred tax liabilities		(1,024	)		(430	)

Summary of Unrecognised Deferred Tax Assets

Deferred tax assets have not been recognised in respect of the following items, because it is not probable that future taxable profit will be available against which the Group can use the benefits therefrom.

Unrecognised deferred tax assets	31/12/20		31/12/19
Tax loss carry-forwards		97,107		97,544
Provision for contingent liabilities		3,695		5,839
Allowance for doubtful accounts		2,547		2,296
Inventory obsolescence		2,480		2,336
Provision for warranties		1,051		1,419
Impairment of non-financial assets		967		984
Deferred costs		822		—
Intercompany profit on inventories		439		1,643
IAS 19 adjustment - employees’ leaving entitlement		433		389
Goodwill and intangible assets		196		483
Other temporary differences		992		1,124
Total unrecognised deferred tax assets		110,729		114,057

Summary of Tax Loss Carry Forward

As at December 31, 2020 and 2019 the tax losses carried-forward of the Group expire as follows:

	2020		Expire date		2019		Expire date
Expire in five years		7,421	2021-2025			12,640	2020-2024
Expire after five years		4,902	> 2025			6,021	> 2024
Never expire		384,440		—		381,160		—
Total		396,763				399,821