XML 66 R17.htm IDEA: XBRL DOCUMENT
v3.22.4

INCOME TAXES | 12 Months Ended
--- | ---
Dec. 31, 2022
Income taxes [Abstract] |
INCOME TAXES | 10. INCOME TAXES Income tax expense is as follows:
| For the years ended December 31,
| 2022 |  | 2021 |  | 2020
| (€ thousand)
Current tax expense | 269,924 |  |  | 218,540 |  |  | 120,115 |
Deferred tax benefit | (30,178) |  |  | (12,001) |  |  | (62,474) |
Taxes relating to prior years | (1,274) |  |  | 2,556 |  |  | 514 |
Total income tax expense | 238,472 |  |  | 209,095 |  |  | 58,155 |
The Italian Group’s entities participate in a group Italian tax consolidation under Ferrari N.V. Income tax expense amounted to €238,472 thousand, €209,095 thousand and €58,155 thousand for the years ended December 31, 2022, 2021 and 2020, respectively. Income taxes for the years ended December 31, 2022, 2021 and 2020 benefited from the application of the Patent Box tax regime, which provides tax benefits for companies that generate income through the use of intangible assets. Starting in 2020 the Group has applied the Patent Box tax regime for the period from 2020 to 2024, in line with the tax regulations applicable in Italy, and determined the income eligible for the Patent Box regime with recognition of the Patent Box tax benefit in three equal annual installments. The Law Decree (Decree) n. 146 enacted by the Italian authorities, effective from October 22, 2021 and as amended by the 2022 Italian budget law, replaces the previous Patent Box tax regime with a new one that provides a 110% “super tax deduction” for certain costs related to eligible intangible assets. The Decree provides for a specific transitional procedure between the two regimes. In the fourth quarter of 2020, Ferrari benefited from the measures introduced in Italy by art. 110 of the Law Decree n. 104/2020, converted in the Law n. 126/2020, enacting “Urgent measures to support and relaunch the economy”, which reopened the voluntary step up of tangible and intangible assets, with the application of a substitute tax at a rate of 3 percent. In particular, Ferrari S.p.A. benefited from the one-time partial step-up of its trademark for tax purposes. The deferred tax asset will be utilized over a 50-year period (following the introduction of the 2022 Italian budget law (Law 234/2021) which provides for an extension from 18 years to 50 years of the amortization period for tax purposes for any trademarks and goodwill that benefited from the step-up regime) and the substitute tax will be paid in three equal annual installments starting in 2021. The table below provides a reconciliation between actual income tax expense and the theoretical income tax expense, calculated on the basis of the applicable corporate tax rate in effect in Italy, which was 24.0 percent for each of the years ended December 31, 2022, 2021 and 2020.
| For the years ended December 31,
| 2022 |  | 2021 |  | 2020
| (€ thousand)
Theoretical income tax expense | 282,664 |  |  | 250,136 |  |  | 160,088 |
Tax effect on: |  |  |  |  |
Permanent and other differences | (85,736) |  |  | (79,267) |  |  | (129,016) |
Italian Regional Income Tax (IRAP) | 39,446 |  |  | 32,422 |  |  | 22,662 |
Effect of changes in tax rates and tax regulations | 553 |  |  | 633 |  |  | 800 |
Differences between foreign tax rates and the theoretical Italian tax rate and tax holidays | 1,945 |  |  | 2,077 |  |  | 1,734 |
Taxes relating to prior years | (1,274) |  |  | 2,556 |  |  | 514 |
Withholding tax on earnings | 875 |  |  | 539 |  |  | 1,373 |
Income tax expense | 238,472 |  |  | 209,095 |  |  | 58,155 |
Effective tax rate | 20.2 | % |  | 20.1 | % |  | 8.7 | %
The effective tax rate was 20.2 percent, 20.1 percent and 8.7 percent for t he years ended December 31, 2022, 2021 and 2020, respectively. The increase in the effective tax rate from 8.7 percent in 2020 to 20.1 percent in 2021 was primarily attributable to the tax benefits from the measures introduced in Italy by art. 110 of the Law Decree No. 104/2020, converted in the Law n. 126/2020, enacting “Urgent measures to support and relaunch the economy”, which allowed Ferrari a one-time partial step-up of its trademark for tax purposes resulting in a net tax benefit of €74,700 thousand in 2020 (as further described above) and to a lesser extent, the effects of deductions for eligible research and development costs. The net benefit from the step up is included within “permanent and other differences” for 2020 in the tax rate reconciliation above. The Patent Box benefit relating to 2022, 2021 and 2020 is included within “permanent and other differences” in the tax rate reconciliation above. The Italian Regional Income Tax (“IRAP”) is only applicable to Italian entities and is calculated on a measure of income defined by the Italian Civil Code as the difference between operating revenues and costs, before financial income and expense, and in particular before the cost of fixed-term employees, credit losses and any interest included in lease payments. IRAP is calculated using financial information prepared under Italian accounting standards. IRAP is applied on the tax base at 3.9 percent for each of the years ended December 31, 2022, 2021 and 2020. The analysis of deferred tax assets and deferred tax liabilities at December 31, 2022 and 2021, is as follows:
| At December 31,
| 2022 |  | 2021
| (€ thousand)
Deferred tax assets: |  |  |
To be recovered after 12 months | 107,252 |  |  | 94,808 |
To be recovered within 12 months | 96,130 |  |  | 73,949 |
| 203,382 |  |  | 168,757 |
Deferred tax liabilities: |  |  |
To be realized after 12 months | (86,160) |  |  | (78,496) |
To be realized within 12 months | (40,347) |  |  | (17,477) |
| (126,507) |  |  | (95,973) |
Net deferred tax assets/(liabilities) | 76,875 |  |  | 72,784 |
The movements in deferred income tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, are as follows:
| At December 31, 2021 |  | Recognized in consolidated income statement |  | Charged to equity |  |  |  | Translation differences and other changes |  | At December 31, 2022
| (€ thousand)
Deferred tax assets arising on: |  |  |  |  |  |  |  |  |
Provisions | 103,981 |  |  | 16,556 |  |  | — |  |  |  |  | (258) |  |  | 120,279 |
Deferred income | 51,635 |  |  | — |  |  | — |  |  |  |  | — |  |  | 51,635 |
Employee benefits | 3,041 |  |  | — |  |  | (376) |  |  |  |  | — |  |  | 2,665 |
Foreign currency exchange rate differences | 610 |  |  | 2,830 |  |  | — |  |  |  |  | (1) |  |  | 3,439 |
Cash flow hedge reserve | 8,455 |  |  | — |  |  | (8,455) |  |  |  |  | — |  |  | — |
Inventory obsolescence | 69,107 |  |  | 31,648 |  |  | — |  |  |  |  | 80 |  |  | 100,835 |
Allowances for doubtful accounts | 5,178 |  |  | 50 |  |  | — |  |  |  |  | (5) |  |  | 5,223 |
Depreciation | 17,555 |  |  | (15) |  |  | — |  |  |  |  | (7) |  |  | 17,533 |
Trademark step-up | 84,537 |  |  | 837 |  |  | — |  |  |  |  | — |  |  | 85,374 |
Patent box | 65,693 |  |  | 12,688 |  |  | — |  |  |  |  | — |  |  | 78,381 |
Other | 14,328 |  |  | 575 |  |  | — |  |  |  |  | (59) |  |  | 14,844 |
Total deferred tax assets | 424,120 |  |  | 65,169 |  |  | (8,831) |  |  |  |  | (250) |  |  | 480,208 |
Deferred tax liabilities arising on: |  |  |  |  |  |  |  |  |
Depreciation | (6,781) |  |  | 2,076 |  |  | — |  |  |  |  | (352) |  |  | (5,057) |
Capitalization of development costs | (311,438) |  |  | (44,134) |  |  | — |  |  |  |  | (2) |  |  | (355,574) |
Employee benefits | (1,053) |  |  | (457) |  |  | — |  |  |  |  | — |  |  | (1,510) |
Foreign currency exchange rate differences | (526) |  |  | (634) |  |  | — |  |  |  |  | — |  |  | (1,160) |
Cash flow hedge reserve | — |  |  | — |  |  | (16,171) |  |  |  |  | — |  |  | (16,171) |
Tax on undistributed earnings | (17,404) |  |  | 6,826 |  |  | — |  |  |  |  | — |  |  | (10,578) |
Other | (14,134) |  |  | 1,332 |  |  | — |  |  |  |  | (481) |  |  | (13,283) |
Total deferred tax liabilities | (351,336) |  |  | (34,991) |  |  | (16,171) |  |  |  |  | (835) |  |  | (403,333) |
Total net deferred tax assets/(liabilities) | 72,784 |  |  | 30,178 |  |  | (25,002) |  |  |  |  | (1,085) |  |  | 76,875 |
| At December 31, 2020 |  | Recognized in consolidated income statement |  | Charged to equity |  | Translation differences and other changes |  | At December 31, 2021
| (€ thousand)
Deferred tax assets arising on: |  |  |  |  |  |  |
Provisions | 90,663 |  |  | 12,712 |  |  | — |  |  | 606 |  |  | 103,981 |
Deferred income | 52,241 |  |  | (606) |  |  | — |  |  | — |  |  | 51,635 |
Employee benefits | 2,931 |  |  | — |  |  | 110 |  |  | — |  |  | 3,041 |
Foreign currency exchange rate differences | 516 |  |  | 95 |  |  | — |  |  | (1) |  |  | 610 |
Cash flow hedge reserve | — |  |  | — |  |  | 8,455 |  |  | — |  |  | 8,455 |
Inventory obsolescence | 61,726 |  |  | 7,131 |  |  | — |  |  | 250 |  |  | 69,107 |
Allowances for doubtful accounts | 5,643 |  |  | (474) |  |  | — |  |  | 9 |  |  | 5,178 |
Depreciation | 17,551 |  |  | 7 |  |  | — |  |  | (3) |  |  | 17,555 |
Trademark step-up | 83,700 |  |  | 837 |  |  | — |  |  | — |  |  | 84,537 |
Patent box | 27,902 |  |  | 37,791 |  |  | — |  |  | — |  |  | 65,693 |
Other | 6,027 |  |  | 3,927 |  |  | — |  |  | 4,374 |  |  | 14,328 |
Total deferred tax assets | 348,900 |  |  | 61,420 |  |  | 8,565 |  |  | 5,235 |  |  | 424,120 |
Deferred tax liabilities arising on: |  |  |  |  |  |  |  |  |
Depreciation | (7,550) |  |  | 1,217 |  |  | — |  |  | (448) |  |  | (6,781) |
Capitalization of development costs | (264,087) |  |  | (47,349) |  |  | — |  |  | (2) |  |  | (311,438) |
Employee benefits | (844) |  |  | (209) |  |  | — |  |  | — |  |  | (1,053) |
Foreign currency exchange rate differences | (559) |  |  | 33 |  |  | — |  |  | — |  |  | (526) |
Cash flow hedge reserve | (9,505) |  |  | — |  |  | 9,505 |  |  | — |  |  | — |
Tax on undistributed earnings | (15,861) |  |  | (1,543) |  |  | — |  |  | — |  |  | (17,404) |
Other | (11,747) |  |  | (1,568) |  |  | — |  |  | (819) |  |  | (14,134) |
Total deferred tax liabilities | (310,153) |  |  | (49,419) |  |  | 9,505 |  |  | (1,269) |  |  | (351,336) |
Total net deferred tax assets/(liabilities) | 38,747 |  |  | 12,001 |  |  | 18,070 |  |  | 3,966 |  |  | 72,784 |
The decision to recognize deferred tax assets is made for each company in the Group by assessing whether the conditions exist for the future recoverability of such assets by taking into account the basis of the most recent forecasts from budgets and business plans. Deferred taxes on the undistributed earnings of subsidiaries have not been recognized, except in cases where it is probable the distribution will occur in the foreseeable future. At December 31, 2022, the aggregate amount of temporary differences related to remaining distributable earnings of the Group’s subsidiaries where deferred tax liabilities have not been recognized amounted to €268,923 thousand (€186,806 thousand at December 31, 2021).

X
- Definition The entire disclosure for income taxes. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Name IAS -Number 12 -IssueDate 2022-03-24 -Section Disclosure -URI https://taxonomy.ifrs.org/xifrs-link?type=IAS&num=12&code=ifrs-tx-2022-en-r&doctype=Standard&dita_xref=IAS12_g79-88__IAS12_g79-88_TI -URIDate 2022-03-24 + Details
Name: | ifrs-full_DisclosureOfIncomeTaxExplanatory
Namespace Prefix: | ifrs-full_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Income taxes [Abstract] + References No definition available. + Details
Name: | race_IncometaxesAbstract
Namespace Prefix: | race_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration