The Israel Tax Authority (ITA) recently published Income Tax Circular No. 1/2021 of 27 January 2021 concerning the ITA's position on the treatment of payments made by an Israeli subsidiary to its foreign parent under a recharge agreement for stock-based compensation (capital instruments) provided to the subsidiary's employees. Under such agreements, the parent company (the allocating company) charges the subsidiary (the employer company) a fee for the stock allocated to the employee. The Cir…