Executive summaryThe Israeli Tax Authority (ITA) has published the final circular (the Circular) regarding payments to a parent company under recharge agreements for the grant of stock-based compensation (SBC). This follows a draft circular (the Draft Circular) that was published by the ITA in March 2020.1The purpose of this Circular is to outline the ITA’s position with respect to the intercompany payments between the Israeli company that employs the relevant employee to which the SBC is being granted and the parent company that issues the relevant SBC and its classification as reimbursement for participation of the parent company in payroll costs...