The provisions of the VAT Act do not define the concept of “compensation”. Pursuant to the provisions of the Civil Code, the essence of compensation is not the payment for the benefit, but the compensation for the damage. So why the doubt whether the receipt of compensation by local government units implies the obligation to prove the output VAT? According to the view established in the jurisprudence, it is not the name that is essential, but the actual nature of the service.
Source Deloitte
