Luxembourg, 09/11/2001 (Agence Europe) - A press release from the Court of Justice rules that Dutch legislation allowing the deduction for the purposes of VAT of a certain amount of an allowance paid by an employer to employees using their own vehicle for business purposes does not comply with the Sixth VAT Directive. The Court recalled that Member States do not have any discretion as regards the extent of the right to deduct: the right applies only in respect of VAT paid on goods and services supplied to one taxable person by another taxable person. "An employee acting for his employer cannot have the status of taxable person, even where he uses his own vehicle for the purposes of the business", states the press release, adding "The Court states finally that the objective of fiscal neutrality is doubtless not fully attained in such circumstances, since the business is not permitted to deduct the VAT element contained in the allowance paid to the employee although that item of expenditure has been incurred for the purposes of the employer's economic activity". "The Court pointed out, however, that it is for the Community legislature to establish detailed rules for the application of any right to deduct, and that no such right exists in circumstances of this kind as Community law now stands".