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INCOME TAXES (Tables) | 12 Months Ended
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Dec. 31, 2022
Income taxes [Abstract] |
Disclosure of 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 |
Income tax reconciliation | 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 | %
Disclosure of deferred tax liabilities | 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 |
Disclosure of deferred tax assets | 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 |
Disclosure of deferred income tax liabilities | 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 |
Disclosure of deferred income tax assets | 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 |

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