ORDER OF THE GENERAL COURT (Seventh Chamber, Extended Composition)
15 December 2017 (*)
(State aid — Aid implemented by Ireland in favour of Apple — Advance tax agreement (tax ruling) — Selective tax advantages — Action for annulment — Intervention — Third-country — No interest in the result of the case)
In Case T‑892/16,
Apple Sales International, established in Cork (Ireland),
Apple Operations Europe, established in Cork,
represented by A. von Bonin and E. van der Stok, lawyers, D. M. Beard QC, A. Bates, J. Bourke, and L. Osepciu, Barristers,
applicants,
supported by
Ireland, represented initially by K. Duggan and E. Creedon, acting as Agents, and subsequently by K. Duggan, M. Browne, J. Quaney and A. Joyce, acting as Agents, and by P. Gallagher, D. McDonald, G. Collins SC, P. Baker QC, S. Kingston, C. Donnelly and B. Doherty, Barristers,
intervener,
v
European Commission, represented initially by P.J. Loewenthal, and subsequently by R. Lyal and P.J. Loewenthal, acting as Agents,
defendant,
supported by
EFTA Surveillance Authority, represented by C. Zatschler, M. Sánchez Rydelski and M. Moustakali, acting as Agents,
intervener,
APPLICATION for annulment of Commission Decision C(2016) 5605 final of 30 August 2016 on State aid SA.38373 (2014/C) (ex 2014/NN) (ex 2014/CP) implemented by Ireland to Apple,
THE GENERAL COURT (Seventh Chamber, Extended Composition),
composed M. van der Woude, acting as President, V. Tomljenović (Rapporteur), E. Bieliūnas, A. Marcoulli and A. Kornezov, Judges,
makes the following
Order
Facts and procedure
1 By application lodged at the Court Registry on 19 December 2016, the applicants, Apple Sales International and Apple Operations Europe, brought an action seeking annulment of Commission Decision C(2016) 5605 final of 30 August 2016 on State aid SA.38373 (2014/C) (ex 2014/NN) (ex 2014/CP) implemented by Ireland to Apple (‘the contested decision’).
2 By documents lodged at the Court Registry on 31 March 2017, Ireland and the EFTA Surveillance Authority sought leave to intervene in support of, respectively, the applicants and the Commission. Those applications were notified to the main parties in accordance with Article 144 of the Rules of Procedure of the General Court.
3 By decision of 28 June 2017, the President of the Seventh Chamber (Extended Composition) of the General Court granted Ireland’s application for leave to intervene.
4 By order of 19 July 2017, the President of the Seventh Chamber (Extended Composition) of the General Court granted the EFTA Surveillance Authority’s application for leave to intervene.
5 By document lodged at the Court Registry on 13 April 2017, the United States of America sought leave to intervene in support of the form of order sought by the applicants.
6 That application for leave to intervene was notified to the main parties in accordance with Article 144(1) of the Rules of Procedure.
7 By document lodged on 5 May 2017, the Commission raised objections to the application of the United States of America for leave to intervene.
8 By document lodged on 10 May 2017, the applicants raised no objections to that application for leave to intervene.
9 In accordance with Article 144(5) and Article 19(2) of the Rules of Procedure, the acting President of the Seventh Chamber (Extended Composition) of the General Court referred the decision on the application for leave to intervene to the Chamber.
Law
10 Under the second paragraph of Article 40 of the Statute of the Court of Justice of the European Union, applicable to proceedings before the General Court pursuant to the first paragraph of Article 53 thereof, any person able to establish an interest in the result of a case submitted to the Court is entitled to intervene, except in cases between Member States, between institutions of the Union or between Member States and institutions of the Union. An application to intervene is to be limited to supporting the form of order sought by one of the parties.
11 Furthermore, it follows from the case-law that, when a third country seeks leave to intervene in a dispute before the Courts of the European Union, it is regarded, for the purposes of that application, like any other person, distinct from the Member States, which, pursuant to the second paragraph of Article 40 of the State of the Court of Justice, must establish an interest in the result of a case (order of 23 February 1983, Chris International Foods v Commission, 91/82 and 200/82, EU:C:1983:45).
12 It is settled case-law that the concept of an interest in the result of the case, within the meaning of Article 40 of the Statute of the Court of Justice, must be defined in the light of the precise subject matter of the dispute and be understood as meaning a direct and existing interest in the ruling on the forms of order sought and not as an interest in relation to the pleas in law put forward. The expression ‘result’ is to be understood as meaning the operative part of the final judgment which the parties ask the Court to deliver (orders of 25 November 1964, Lemmerz-Werke v High Authority, 111/63, EU:C:1964:82, at 717, and of 4 February 2004, Coöperatieve Aan- en Verkoopvereniging Ulestraten, Schimmert en Hulsberg and Others v Commission, T‑14/00, EU:T:2004:32, paragraph 11). It is necessary, in particular, to ascertain whether the applicant to intervene is directly affected by the contested decision and whether its interest in the result of the case is established (order of the President of the Court of 17 June 1997, National Power and PowerGen v Commission, C‑151/97 P(I) and C‑157/97 P(I), EU:C:1997:307, paragraph 53, and order of 3 June 1999, ACAV and Others v Council, T‑138/98, EU:T:1999:121, paragraph 14).
13 By contrast, where the result of the case in question will have no direct impact on the legal or economic situation of the person in question, that person may not be granted leave to intervene (see, to that effect, order of 14 October 2008, FIFA v Commission, T‑68/08, not published, EU:T:2008:436, paragraph 17).
14 In the present case, it should be borne in mind that the form of order sought by the applicants seeks annulment of the contested decision. By that decision, the Commission found that the two tax rulings issued by Ireland in 1991 and 2007 in favour of the applicants, which enable the latter to determine their tax liability in Ireland on a yearly basis, constitute State aid, within the meaning of Article 107(1) TFEU, which had been unlawfully implemented in breach of Article 108(3) TFEU and was incompatible with the internal market. Furthermore, the Commission ordered Ireland to recover that aid from the applicants.
15 In support of its application for leave to intervene, the United States of America puts forward the following arguments.
16 In the first place, the United States of America argues that its economic situation would be affected by the result of the present case to the extent that the recovery ordered by the contested decision could result in an increase in the amount of tax credits or deductions which the applicants’ parent company could claim from the tax authorities in that country, at the time where that company decides to repatriate profits obtained by its off-shore subsidiaries. Such repatriation could be chosen by the applicants’ parent company or those profits could be regarded as having been repatriated following a possible tax reform in the United States of America.
17 From the outset, as regards the subject matter of the case, concerning which the interest of the person who seeks leave to intervene must be defined, according to the case-law cited in paragraph 12 above, it should be recalled that the present action seeks annulment of the contested decision, which found that unlawful and incompatible aid had been granted to the applicants and ordered its recovery. Accordingly, the result of the present case cannot pre-determine the internal decisions of the group to which the applicants belong, such as the distribution of profits or the repatriation of profits, still less so the internal decisions of the parent company of the group, in the context of its rights and obligations in relation to tax in the United States of America.
18 Furthermore, as regards the criterion relating to the existence of a direct interest in the result of the case, it should be noted that, according to the case-law, the adverse effect, even if significant for the economic and financial interests of the applicant for leave to intervene due to the economic consequences which the result of the case could have on the economic situation of the main party in support of which leave to intervene is sought, is not sufficient for that application to be granted (see, to that effect, order of the President of the Court of 6 October 2015, Metalleftiki kai Metallourgiki Etairia Larymnis Larko v Commission, C‑362/15 P(I), EU:C:2015:682, paragraph 19). In the present case, it should be noted that the interest which the United States of America claims to have stems from the negative effect that the result of the case would have on its tax revenues resulting from the tax credits which could be claimed by the parent company of the group to which the applicants belong. That tax credit would result from the amounts paid by the applicants in Ireland following the recovery ordered by the contested decision if the parent company decided to repatriate the applicants’ profits.
19 Therefore, although the contested decision could be viewed as directly harming the applicants’ economic and financial interests, so that the result of the present case is liable to have direct economic consequences for their economic situation, it is necessary to find that those economic consequences could only indirectly affect the economic situation of the United States of America. Those economic consequences could arise only by means of an application for a tax credit, which must moreover be lodged not by the applicants but by their parent company, the economic situation of which would also, but less immediately, be affected by the result of the present case.
20 It follows that the United States of America has failed to establish the existence of a direct interest in the result of the case.
21 As regards the criterion relating to whether the interest of the applicant for leave to intervene in the result of the case is actually established, according to the case-law cited in paragraph 12 above, it is sufficient to note that, according to the arguments made by the United States of America itself, the alleged negative effects on its economic situation would be dependent on many factors, the occurrence of any of which is far from certain, namely, the repatriation of the profits of the off-shore subsidiaries of the parent company of the group to which the applicants belong and the tax credit which that company might claim from the tax authorities of the United States of America.
22 The United States of America submits that its economic situation would be affected only if the applicants’ parent company decided to repatriate the profits of its off-shore subsidiaries.
23 First, it must be stated that the United States of America has not produced evidence establishing that the repatriation of profits from off-shore subsidiaries of the applicants’ parent company is established. Accordingly, that decision cannot be viewed as being automatic, the applicants’ parent company being free to make its own decisions in that regard.
24 Moreover, assuming that such repatriation were to take place, it would also be necessary for the parent company of the group to which the applicants belong to claim, from the tax authorities of the United States of America, tax credits relating to the repayment ordered by the contested decisions and for those authorities to uphold that claim. The United States of America has not provided any further clarification or other evidence which establishes that the repayment of aid ordered by the Commission would automatically give rise to a federal tax credit due in the United States of America. For example, no information was provided on the issue as to whether the grant of such a tax credit is subject to authorisation on the part of the tax authorities in the United States of America or to any other preconditions.
25 Second, it should be noted that the United States of America has not provided any further clarification as regards the scope and entry into force of the tax reform to which it made reference, nor did it explain how that reform would bring about the repatriation of the profits of the off-shore subsidiaries of the applicants’ parent company. In support of its arguments, the United States of America refers to the document entitled ‘White Paper’, issued by the United States of America Treasury Department on 24 August 2016, according to which ‘there is the possibility that any repayments ordered by the Commission will be considered foreign income taxes that are creditable against U.S. taxes owed by the companies in the United States of America. If so, the companies’ U.S. tax liability would be reduced dollar for dollar by these recoveries when their offshore earnings are repatriated or treated as repatriated as part of possible U.S. tax reform’. That quotation itself highlights the hypothetical nature of such a tax credit, in particular the uncertainty of the repatriation of off-shore profits in the context of a possible tax reform in the United States of America.
26 It follows from the foregoing that the United States of America has not established an interest in the result of the case that would give rise to the alleged negative effect that the repayment ordered by the contested decision would have on its tax revenues.
27 In the second place, the United States of America argues that the contested decision would harm its efforts to develop rules relating to transfer pricing within the framework of the Organisation for Economic Co-operation and Development (OECD).
28 In that regard, it should be pointed out that there is no apparent direct link between the contested decision and the development of rules relating to transfer pricing within the framework of the OECD, and that is all the more the case because such rules are established collectively by the OECD members and not by the efforts of a single State. In any event, the United States of America has not adduced any specific evidence that supports its claim that the contested decision would harm its efforts to develop those rules.
29 In the third place, the United States of America argues that the contested decision would have a negative impact on the capacity of the Member States to honour their obligations stemming from bilateral tax agreements entered into between it and those Member States.
30 In that regard, it must be stated that the United States of America has not put forward any evidence making it possible to identify the link between the contested decision and the bilateral tax agreements it has entered into with the Member States, nor exactly how the result of the present case would affect those agreements.
31 In the fourth place, the United States of America argues that its intervention could assist the Court in understanding the tax law of that country.
32 In that regard, it is sufficient to note that, under the fourth paragraph of Article 40 of the Statute of the Court of Justice, intervention is to be limited to supporting the form of order sought by one of the parties, which therefore precludes an intervention seeking to assist the Court in understanding law, as put forward by the United States of America.
33 Furthermore, as recalled in paragraph 12 above, the applicant for leave to intervene must establish a direct and existing interest in the result of the case, namely, an interest in the ruling on the forms of order sought themselves and not an interest in relation to the pleas in law put forward. In that regard, it should be recalled that the present action seeks annulment of the contested decision in so far as it found that the two tax rulings issued by the Irish tax authorities in question constituted State aid, within the meaning of Article 107(1) TFEU, unlawfully implemented in breach of Article 108(3) TFEU, and in so far as the Commission ordered the recovery of that aid pursuant to Article 108(2) TFEU. Accordingly, the Court must resolve the present case on the basis of EU law and not the tax law of the United States of America.
34 It must therefore be found that the arguments put forward by the United States of America relating to, on the one hand, the alleged negative effects of the contested decision on its tax revenues, the bilateral tax agreements it has signed with the EU Member States, and its efforts to develop rules relating to transfer pricing within the framework of the OECD and, on the other, the assistance that it could provide to the Court for the purposes of understanding American tax law, are not sufficient to establish that it is directly affected by the contested decision or that it has a particular interest in the result of the case within the meaning of the case-law cited in paragraph 12 above.
35 Accordingly, the United States of America has not succeeded in establishing an interest in the result of the case within the meaning of the second paragraph of Article 40 of the Statute of the Court of Justice, as interpreted by the case-law. The United States of America’s application for leave to intervene must therefore be rejected.
Costs
36 Under Article 133 of the Rules of Procedure, a decision as to costs is to be given in the judgment or order which closes the proceedings. Since the present order closes the proceedings as far as the United States of America is concerned, a decision must be given on the costs relating to its intervention.
37 Under Article 134(1) of the Rule of Procedure, read in conjunction with Article 144(6) thereof, the unsuccessful party is to be ordered to pay the costs, if they have been applied for in the successful party’s pleadings. Since the United States of America has been unsuccessful, but the main parties have not sought an order as to costs, it must be held that each party should bear its own costs.
On those grounds,
THE GENERAL COURT (Seventh Chamber, Extended Composition)
hereby orders:
1. The application for leave to intervene lodged by the United States of America is rejected.
2. Each party shall bear its own costs incurred in connection with the United States of America’s application for leave to intervene.
Luxembourg, 15 December 2017.
E. Coulon | | M. van der Woude |
RegistrarActing as President