Slovenian referee Slavko Vincic pointed at the penalty spot after Giovanni Di Lorenzo nudged Jeremy Doku inside the area.
Italy are 2-1 up after 45 minutes and had a goal ruled out for offside in an action packed first half at the Allianz Arena.
Nicolò Barella scored the opener for Italy after 31 minutes and Lorenzo Insigne doubled the lead with a trademark curler into the top corner behind Thibaut Courtois.
The Napoli winger seemed to have given the Azzurri a two-goal cushion for the break, but then Vincic pointed at the spot, to give Romelu Lukaku a chance to reduce the deficit for the Red Devils.
Doku used his extreme pace to get around Di Lorenzo, who gave the winger a nudge as he was passing, and the Stade Rennais player went over.
Was the ref right to award Belgium a penalty here?#BEL 1-2 #ITA
📺 Watch live: https://t.co/E7DKcQ7Jih#bbceuro2020 #euro2020 pic.twitter.com/XbvzVuwspi
— Match of the Day (@BBCMOTD) July 2, 2021
Belgium have one back already! 😅
Lukaku from the penalty spot with his fourth goal of @EURO2020#BELITA | #ITVFootball | #Euro2020 pic.twitter.com/rDRr7uU6RE
— ITV Football (@itvfootball) July 2, 2021