1. Introduction:
The non-profit sector plays an increasingly vital role in addressing societal needs and fostering community development across the globe, and Armenia is no exception. The establishment and operation of these organizations are underpinned by the fundamental right to freedom of association, a principle enshrined in the Constitution of the Republic of Armenia . Article 28 of the Constitution guarantees this fundamental freedom, allowing individuals to form and join organizations, including trade unions . Furthermore, Article 25 of the Constitution explicitly secures the right of every person to establish organizations involving others . This constitutional foundation provides the legal basis for the flourishing of non-governmental initiatives aimed at public benefit. Complementing this constitutional guarantee is a developed legal framework specifically addressing the non-profit sector, primarily through distinct laws governing Public Organizations and Foundations . The existence of these specific legal instruments signifies a level of maturity and recognition by the Armenian state of the importance and unique characteristics of non-profit entities. This article aims to serve as a comprehensive guide for individuals and entities seeking to navigate the process of forming and registering a non-profit organization in Armenia, outlining the legal structures available, the procedures involved, and the ongoing obligations that must be met.
2. Legal Forms of Non-Profit Organizations in Armenia:
Armenian law primarily recognizes two main legal forms for non-profit organizations: Public Organizations, often referred to as Non-Governmental Organizations (NGOs), and Foundations . While other forms such as Associations, Cooperatives, and Endowments exist within the legal landscape , Public Organizations and Foundations are the most prevalent and are governed by specific legislative acts.
2.1 Public Organizations (NGOs):
Public Organizations in Armenia are defined within the framework of the “Law on Public Organizations” as a type of non-profit public association that does not pursue the goal of generating profit and subsequently distributing that profit among its members . These organizations are typically established to address a wide range of societal needs, including satisfying non-religious spiritual and other interests, protecting the rights and interests of specific groups, providing various forms of assistance, and generally carrying out activities that benefit the public . It is important to note that for an organization to be registered specifically as a Public Organization, its primary objectives cannot be political, religious, or professional in nature . While these organizations can certainly support numerous social causes , if the core aim is centered around political, religious, or professional objectives, the founders would need to consider registering under a different legal form, such as a Foundation or an Association . The establishment of a Public Organization requires a minimum of two physical persons to act as founders . Legally, the members of a Public Organization are not held liable for the financial obligations of the organization, and conversely, the organization is not responsible for the personal obligations of its members . The governance structure of a Public Organization typically includes a supreme body, which may be called an assembly, convention, or summit, and a general assembly that comprises all the founding members . The general assembly is mandated to convene at least once every two years . This legal distinction regarding the primary objectives suggests a deliberate separation within the Armenian legal system, potentially guiding organizations with specific political, religious, or professional missions towards alternative legal structures more suited to their aims. Furthermore, the requirement for at least two founders, in contrast to the single founder option for foundations, might reflect a legislative intention to promote collective action and broader community engagement in organizations intended to serve the public interest.
2.2 Foundations:
In Armenia, a Foundation is defined by the “Law on Foundations” as a non-commercial organization that does not have members . Foundations are established based on the voluntary contribution of property by individuals or legal entities . The primary purpose of a foundation is to pursue social, charitable, cultural, educational, scientific, public health, environmental, or other goals that benefit the public . Unlike Public Organizations, a Foundation can be founded by a single person, multiple individuals or legal entities, or even through a will . A key characteristic of a Foundation is that it possesses separate property and is legally responsible for its obligations using its own assets . The property contributed by the founder becomes the ownership of the foundation . The governance of a Foundation is typically vested in a Board of Trustees, which serves as the highest management and supervisory body, and a Manager who is responsible for the day-to-day operational activities . The Board of Trustees must consist of at least three members . The possibility of establishing a foundation with a single founder provides greater flexibility for individual philanthropists or organizations seeking to dedicate resources to specific causes without the necessity of co-founders. Furthermore, the extensive list of permissible goals for foundations indicates the broad spectrum of public benefit activities that can be undertaken under this legal structure, potentially encompassing areas that might not be the primary focus of a Public Organization.
Table 1: Key Differences Between Public Organizations (NGOs) and Foundations
| Feature | Public Organization (NGO) | Foundation |
|---|---|---|
| Primary Purpose | Satisfy diverse public interests, protect rights, provide assistance | Pursue social, charitable, cultural, educational, scientific, etc., public benefit goals |
| Membership Structure | Membership-based | Non-membership |
| Minimum Number of Founders | Two physical persons | One or more physical or legal persons |
| Key Governing Body | Supreme Body (Assembly/Convention) & General Assembly | Board of Trustees |
| Liability of Members | Not liable for organizational debts | Founders generally not liable for organizational debts |
| Typical Primary Objectives | Broad range of social, cultural, rights-based activities (excluding primary political, religious, professional objectives) | Specific philanthropic, charitable, educational, scientific, etc., endeavors |
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3. Formation and Registration of a Public Organization (NGO):
The process of forming and registering a Public Organization (NGO) in Armenia involves several key steps, beginning with meeting the founder requirements.
3.1 Founder Requirements:
To establish an NGO in Armenia, there must be a minimum of two physical persons acting as founders . These founders can be citizens of Armenia or foreign nationals, and generally, they must be at least 18 years of age . However, Armenian law makes an exception for individuals between the ages of 14 and 18, who can become founders provided they have the written consent of their legal representative . Certain categories of individuals and entities are restricted from acting as founders of an NGO. These include servicemen of military and law enforcement bodies, as well as political parties, religious organizations, and trade unions . Additionally, state bodies and municipalities are legally prohibited from establishing or participating in NGOs . These specific age restrictions and exclusions suggest a legislative intent to ensure the independence and appropriate nature of those initiating public organizations, likely aiming to prevent potential conflicts of interest or undue influence from governmental or politically/religiously affiliated entities. The focus on physical persons as primary founders further emphasizes the intended grassroots nature of this organizational form.
3.2 Establishment Process:
The establishment of an NGO commences with the prospective founders entering into a written agreement. This agreement should outline the intended joint actions of the founders prior to the formal registration of the organization, as well as the conditions for the transfer of any property to the organization . Following this agreement, the founders must convene a founding assembly. This assembly serves as the primary decision-making forum for the organization’s formation. During this assembly, several crucial decisions must be made, including the decision to formally found the organization itself , the approval of the organization’s charter, which will serve as its governing document , the election of an authorized person who will be responsible for representing the organization during the registration process and in other official capacities , and the decision to proceed with the application for state registration . If the organization’s charter envisions the creation of other governing bodies, these may also be formed or elected during the founding assembly . It is imperative that detailed minutes of the founding assembly are recorded. These minutes must include the date and place where the assembly was held, the names of all individuals who had the right to participate and those who actually participated, a clear agenda of the meeting, the specific issues that were put to a vote, the results of each vote, and the decisions that were ultimately adopted. If one of the founders is a legal entity, their official name and state registration number must also be recorded in the minutes . Finally, the minutes of the founding assembly must be signed by the chairperson and the secretary of the assembly . The requirement for a written agreement among founders and a formal founding assembly with documented minutes ensures a structured and transparent process for establishing the NGO, promoting accountability and clarity from the very beginning. These steps provide a clear and legally sound record of the founders’ intentions, the foundational decisions made, and the established governance framework of the organization.
3.3 Required Documents for Submission to the State Registry of Legal Entities (Ministry of Justice):
To officially register a Public Organization in Armenia, a specific set of documents must be submitted to the State Registry of Legal Entities, which operates under the Ministry of Justice . The primary documents required include a formal application for state registration and the protocol (minutes) of the founders’ assembly, which should include all the resolutions adopted during the meeting . The resolution specifically deciding to apply for state registration must not have been adopted earlier than 60 calendar days from the date when all the necessary documents are submitted to the State Registry . The organization’s charter is another essential document, and at least two copies must be provided . This charter serves as the governing document for the NGO and must clearly define several key aspects of the organization, including its name and any intended short name, its official address, the geographical scope of its operations, its specific goals and objectives, its internal organizational structure, the rights and obligations of its members, the procedures for its management and decision-making processes, the sources from which it will derive its property and funds, and the procedures that will be followed for its potential reorganization or liquidation . Additionally, a list containing detailed passport information for all the founders and the authorized person representing the organization is required. This information typically includes their full names, dates of birth, passport numbers and issuing authorities, registration addresses, phone numbers, and email addresses . If the NGO has more than five founders, the law specifies that passport information for at least five of the founders, along with the authorized person, must be submitted . Proof of payment of the state duty is also necessary. While the exact fee may be subject to change, sources indicate a fee of 10,000 Armenian drams (approximately $25 USD) . The law may also require the submission of other formal information depending on the specific circumstances of the organization . In cases where any of the founders are non-residents of Armenia, notarized and potentially apostilled copies of their passports may be required . This comprehensive list of required documents underscores the importance of thorough preparation and attention to detail when applying for registration. Any missing or incomplete documentation can lead to significant delays in the process or even a refusal of the registration application.
3.4 Registration Timeline and Procedure:
Once all the necessary documents have been compiled, the application for state registration of the Public Organization must be submitted to the State Registry of Legal Entities, which is a division within the Ministry of Justice . For social amalgamations and unions of non-profit organizations, the registration process is handled by the central unit of the State Register . Upon receiving the complete application, the State Registry is legally obligated to review it and issue a decision within a period of 21 days . The registration process can be initiated either by submitting the documents in person at the State Registry or electronically through the online e-register system . The e-register system is designed to streamline the process and make it more efficient for applicants . If, during the review process, the State Registry identifies any missing documents or finds faults in the submitted materials, the timeline for consideration can be temporarily suspended for a period not exceeding 10 days. This suspension allows the applicants an opportunity to provide the missing information or rectify the identified issues . If the registration is successful, the Public Organization will be officially entered into the state register, and a registration certificate will be issued as confirmation of its legal status . The organization is legally considered to be established from the moment this state registration is completed . Following the successful state registration, the newly formed NGO is required to submit an application to the relevant tax body for tax registration within a period of one month . The defined timelines for the registration process offer a degree of predictability for founders, enabling them to plan their organization’s launch more effectively. The availability of electronic registration further simplifies the procedure and can potentially reduce the administrative burden associated with the process.
3.5 Reasons for Refusal of Registration:
While the registration process is generally straightforward, there are specific grounds upon which the State Registry of Legal Entities may refuse to register a Public Organization. These reasons include the failure to submit all of the required documents , if the submitted documents are illegible or contain significant errors , if the organization’s charter is found to contravene the Constitution or any other laws of Armenia , or if the proposed name of the organization is identical to that of another organization already registered in Armenia . Additionally, a violation of the established legal procedure for the formation of a Public Organization can also serve as a basis for refusing registration . It is important to note that the State Registry is legally prohibited from denying registration to an organization simply because it deems the organization’s intended activities to lack usefulness . If an application for registration is refused, the founders have the right to appeal this decision in a court of law . Understanding these potential reasons for refusal is crucial for prospective founders as it allows them to take necessary precautions to ensure their application is complete, accurate, and legally compliant, thereby increasing the likelihood of a successful registration. The right to appeal provides an important safeguard, ensuring that any refusal is subject to judicial review.
4. Formation and Registration of a Foundation:
The formation and registration of a Foundation in Armenia follow a distinct process with specific requirements for founders and documentation.
4.1 Founder Requirements:
Unlike Public Organizations, a Foundation in Armenia can be established by one or more founders, who can be either physical persons (citizens of Armenia or foreign nationals, generally aged 18 or older) or legal entities . The legal framework does not specify restrictions for servicemen or members of political or religious organizations acting as founders of foundations, which differs from the regulations for NGOs. However, state or local self-government bodies are prohibited from being founders of a foundation . It is important to note that a foundation can be established with the participation of the Republic of Armenia or a community, but this requires a specific decree from the Government of the Republic of Armenia or a decision by the head of the community with the approval of the community council . The broader eligibility criteria for founders of foundations, compared to the more specific restrictions for NGOs, may reflect the different nature and purpose of these entities, with foundations often being established by individuals or corporations with particular philanthropic goals, which might include those with religious or professional affiliations, as long as the foundation’s purpose aligns with public benefit. The restriction on direct state founding, but the provision for participation through specific legal acts, maintains a degree of separation while still allowing for public-private partnerships in philanthropic endeavors.
4.2 Establishment Process:
A Foundation in Armenia is typically established through a decision made by a founding assembly if there are multiple founders, or by a sole written decision from a single founder . In cases with multiple founders, they are required to sign a written agreement outlining the terms of the foundation’s creation, including information about the founders themselves, their intended joint actions in establishing the foundation, the foundation’s specific goals, the potential categories of beneficiaries it will serve, the intended duration of its activities, and the rights and obligations of the founders related to its creation . Armenian law also allows for the establishment of a foundation through a will. In such instances, the decision regarding the foundation’s establishment is made by the executor of the will, based on the official Certificate of the Right of Succession . If a founding assembly is convened (in cases with multiple founders), it must take place no later than three months after the initial written agreement on the foundation’s creation is signed. For the assembly to be considered legally authorized, all of the founders or their officially designated representatives must be present and participate . Following the state registration of the foundation, the Board of Trustees, which is the foundation’s highest governing body, must be formed within a period of three months . This flexibility in the methods of establishing a foundation (through an assembly, a sole decision, or a will) provides options that cater to various scenarios and the specific intentions of the founder or founders. The stipulated timeframe for forming the Board of Trustees after registration ensures that the foundation’s governance structure is established promptly, allowing it to commence its activities and operations effectively.
4.3 Required Documents for Submission to the State Registry of Legal Entities:
To register a Foundation in Armenia, several key documents must be submitted to the State Registry of Legal Entities. These include an application for state registration, which must be signed by the appointed Manager or an Ad hoc Manager of the foundation . At least two copies of the foundation’s charter are also required . The charter is a critical document that must define the foundation’s name (which must include the word “foundation” and ideally indicate its field of activity), its place of location, its specific objectives, a list of any entrepreneurial activities it may engage in, detailed information about the founders (including citizenship, full name, passport details, and address for natural persons, and country of incorporation, full name, state registration data, and address for legal persons), the procedure for managing and disposing of the foundation’s property, the intended groups of beneficiaries, the term of operation if the foundation is established for a fixed period, the procedure for establishing the foundation’s governing bodies (including the composition and powers of the Board of Trustees and decision-making processes), and the procedures for its liquidation . For endowment foundations, the charter must also specify the amount and types of the initial funds contributed . A decision on establishing the foundation, made by the founding assembly or the sole founder, must also be submitted . This decision should contain information about the founders, their approval of the foundation’s charter, the appointment of the head of the executive body (Manager or temporary acting head), and the foundation’s name (potentially in multiple languages) and address . If there are multiple founders, the written agreement signed by them regarding the foundation’s creation must also be provided . Proof of payment of the state duty, which is also reported to be around 10,000 Armenian drams (approximately $25 USD), is a necessary part of the application . If the foundation’s name includes the name of a well-known natural person, written consent from that person (or their heirs if deceased) is required . For foundations being established by the Republic of Armenia or a community, the corresponding government decree or the decision by the head of the community with the approval of the community council must be included . The government’s decision must also specify the state administrative body acting on behalf of the founder, and the community’s decision must identify the authorized persons . Additionally, the passport of the foundation’s director or authorized representative must be submitted, and if this individual is not a citizen of Armenia, a notarized Armenian translation of their passport is required . Finally, information about the intended beneficiaries of the foundation must also be provided . The detailed nature of these documentation requirements for foundations, particularly the emphasis on the foundation’s initial assets and the structure of its Board of Trustees, reflects the asset-based nature of many foundations and the importance of clear legal frameworks for their operation and governance.
4.4 Registration Timeline and Procedure:
To register a Foundation, the required documents must be submitted to the State Register of Legal Entities no later than two months from the date the decision to establish the foundation was adopted . Generally, the State Register has a period of 15 days to complete the registration process after receiving all the necessary documents and making a record of their receipt in the incoming documents register on the same day . However, the registration process can be significantly faster, potentially taking as little as one hour, if the founders choose to use a standard charter provided by the State Register . If the foundation is being established based on individual principles and requires a more tailored charter, the registration process may take up to 10 business days . The foundation is legally considered to be created from the moment its state registration is finalized . The relatively shorter standard registration timeline for foundations, and the option for expedited registration with a standard charter, may indicate a more streamlined administrative process, possibly due to the absence of a membership structure. However, the provision for a longer registration period for foundations with individually crafted charters acknowledges the potential complexity of their unique governance and operational frameworks.
4.5 Reasons for Refusal of Registration:
The State Register of Legal Entities may refuse the state registration of a foundation under specific circumstances. These include situations where the legally stipulated procedure for forming a foundation has been violated, if the foundation’s charter is found to contradict any existing laws, if the proposed name of the foundation is identical to the name of another foundation that has already been registered (including those that were liquidated within the preceding year), or if all of the documents required for state registration, as outlined by the law, have not been submitted . In the event that the state registration of a foundation is refused, the applicant has the legal right to appeal this decision to a court of law . It is important to note that the registration of a foundation cannot be refused simply on the grounds that the State Registry deems its creation to be inexpedient . Similar to the reasons for refusing registration to Public Organizations, these grounds for refusal for foundations primarily focus on adherence to legal procedures, the legal conformity of the foundation’s foundational documents, and the uniqueness of its name within the state registry. This consistent approach ensures a uniform standard for the registration of all types of legal entities in Armenia.
5. Governance Structure and Management:
The governance and management structures of Public Organizations (NGOs) and Foundations in Armenia differ to reflect their distinct legal natures and operational models.
5.1 Public Organizations (NGOs):
The mandatory governance structure of a Public Organization in Armenia includes a supreme body, which can take the form of an assembly, convention, or summit, and a general assembly, which is the collective body comprising all of the organization’s founders . Within the legal framework, the Public Organization is granted significant autonomy in determining its own organizational structure, including the definition of its goals, objectives, and methods of operation . The general assembly, as the highest decision-making body, is legally required to convene at least once every two years, following the procedures outlined in the organization’s charter . The members of a Public Organization are afforded a range of rights, including the right to elect and be elected to the organization’s governing bodies, to propose ideas and remarks related to the organization’s activities, to freely express their opinions, to receive various forms of assistance from the organization, to be informed about the organization’s work, to participate in general assembly sessions, to access the organization’s documents and decisions, to appeal decisions made by the organization’s bodies, and to voluntarily terminate their membership . Correspondingly, members also bear certain responsibilities, such as paying any prescribed entrance and membership fees, actively participating and assisting in the organization’s activities, upholding the organization’s reputation through their conduct, and acting in accordance with the organization’s charter and the decisions of its governing bodies . If the organization’s charter establishes a Board (which is typically elected by the General Assembly), this body often plays a key role in setting the dates, times, and preliminary agendas for the General Assembly sessions and in notifying the members accordingly . The specific composition and scope of authority of the Board are usually detailed within the organization’s charter. The emphasis on member participation and the regular convening of the general assembly in Public Organizations highlights their fundamental nature as membership-based entities, ensuring a democratic approach to governance and accountability to their members. The clearly defined rights and responsibilities of members contribute to a participatory organizational culture where members have a voice in the organization’s direction and operations.
5.2 Foundations:
The highest level of management and supervision within a Foundation in Armenia is vested in the Board of Trustees . The law stipulates that the Board of Trustees must consist of at least three members, who must be natural persons with full legal capacity and who have reached the age of 18. Founders of the foundation are eligible to serve on the Board of Trustees . To ensure a clear separation of responsibilities and prevent potential conflicts of interest, individuals serving on the Board of Trustees are prohibited from being members of any other governing body within the foundation . Unless the foundation’s charter specifies otherwise, the Chairperson or Co-Chairs of the Board of Trustees are elected by the board members from among themselves through a majority vote . Generally, members of the Board of Trustees perform their duties on a voluntary basis and do not receive remuneration for their services. However, the Board may establish a system for compensating board members for expenses that they incur while fulfilling their duties . The day-to-day management and operational activities of the foundation are the responsibility of a Manager, who is appointed and can be dismissed by the Board of Trustees . The Manager has authority over all aspects of the foundation’s current operations . The specific procedures for establishing the foundation’s governing bodies, the number of members on the Board of Trustees, the powers and responsibilities of each body, and the processes for making decisions are all defined within the foundation’s charter . The governance structure of foundations, with a Board of Trustees providing strategic oversight and a Manager handling daily operations, reflects a more hierarchical model that is well-suited for organizations that are typically based on dedicated assets and pursue specific objectives as determined by their founders and the board. This structure ensures focused management and clear accountability for the foundation’s activities and resources.
6. Ongoing Compliance and Regulatory Requirements:
Both Public Organizations (NGOs) and Foundations in Armenia are legally required to maintain their registration with the State Registry of Legal Entities . Additionally, both types of organizations are obligated to notify the State Registry of any changes to their official address, following the procedures and timelines prescribed by law .
6.1 Reporting Obligations:
A significant aspect of ongoing compliance for both Public Organizations and Foundations in Armenia is the mandatory submission of annual activity reports to the State Revenue Committee (SRC) . Amendments to the legislation governing Civil Society Organizations (CSOs), which include NGOs and foundations, came into effect on April 24, 2020, standardizing these reporting requirements . Public Organizations are required to publish their annual activity reports by May 30th of the year following the reporting year, while Foundations have a deadline of July 1st . These reports must be submitted electronically through the SRC’s Electronic Reporting System, where each organization can access its own dedicated page. Furthermore, if the organization maintains an official website, it is also required to make these annual reports publicly available on their site . The specific content required in the annual report for NGOs is detailed in a sample form approved by the Head of the State Revenue Committee. This includes comprehensive information such as the organization’s full name, taxpayer identification number (TIN), location, state registration number and date, contact details, the number of members (including volunteers) as of the beginning of the reporting year and the number who benefited from the organization’s resources during that year, a list of all completed projects along with their respective expenditures and funding sources, a breakdown of the organization’s annual income and its sources, a summary of the resources utilized, the total amount of expenses incurred for the organization’s statutory goals, and the number of meetings held by its governing bodies. Additionally, the auditor’s conclusion (if an audit was required) and the conclusion of any supervisory authority (if established by the organization’s charter) must be attached to the report . This mandatory annual reporting for both NGOs and Foundations underscores the Armenian government’s commitment to ensuring transparency and accountability within the non-profit sector. The implementation of an electronic submission system aims to streamline the reporting process, making it more efficient for organizations to fulfill their legal obligations and for the government to oversee their activities. The detailed information required in the NGO report reflects a thorough level of scrutiny expected by the State Revenue Committee, allowing for a comprehensive understanding of the organization’s operations, finances, and impact.
6.2 Audit Requirements:
In Armenia, both Public Organizations and Foundations may be subject to mandatory financial audits under certain conditions. For Public Organizations, if they receive funding from public sources exceeding a threshold of 10 million Armenian drams (approximately 18,800 EUR) in a given reporting year, they are legally obligated to publish an independent auditor’s report . This threshold was increased from a previous level of 5 million AMD . Similarly, Foundations are required to conduct an independent audit and include a statement from the auditor in their annual report if their total assets exceed 10 million Armenian drams . The conduct of audit activities in Armenia is strictly regulated by the Law on Audit Activity, which mandates that all audits must be performed in accordance with International Standards on Auditing (ISA) and other pronouncements issued by the International Auditing and Assurance Standards Board (IAASB), as these are adopted and promulgated by the Public Oversight Board (POB) in Armenia . Furthermore, only organizations that have obtained a specific license to provide audit services are legally permitted to use the term “audit” in their official name . These audit requirements, particularly for organizations that receive substantial public funding or possess significant assets, are designed to ensure financial accountability, promote the proper utilization of resources, and enhance public trust in the non-profit sector. The alignment with international auditing standards signifies a commitment to maintaining high standards of quality and reliability in financial reporting within the sector. The differing thresholds for mandatory audits between NGOs and foundations may reflect the variations in their typical funding models and operational scales, with the increased threshold for NGOs potentially aimed at reducing the financial burden on smaller organizations while still ensuring larger entities are subject to independent financial review.
6.3 Operational Regulations:
Both Public Organizations and Foundations in Armenia are bound by a set of operational regulations that govern their activities. A fundamental requirement is that these organizations must operate strictly within the scope of the statutory goals that are clearly defined in their respective charters . For Public Organizations, a specific regulation prohibits them from engaging in political, religious, or professional activities as their primary statutory goals under the legal form of a “public organization” . However, within these boundaries, NGOs are granted significant autonomy to independently determine their organizational structure, specific goals, operational objectives, and the methods they will employ to achieve those objectives . The law also explicitly prohibits the inclusion of goals in an organization’s statute that are already directly foreseen by law and are typically associated with the characteristics of another type of non-governmental union . The name and any symbols used by a non-profit organization must adhere to specific guidelines. For NGOs, the name must include the words “non-governmental organization,” and for foundations, it must include the word “foundation” . Furthermore, the chosen name and symbols must be unique and cannot be identical or confusingly similar to those of other organizations already registered in Armenia, nor can they include the use of state symbols . Generally, non-profit organizations in Armenia are permitted to engage in cooperation with both local and foreign counterparts and are free to publicly announce any joint projects they undertake . However, severe violations of the law, such as failing to meet registration requirements, operating without necessary licenses for specific activities, or engaging in actions that are explicitly forbidden by law, can lead to the termination of the organization. For Public Organizations, this can be initiated by the governing state body , while for Foundations, a court decision is typically required to begin the dissolution process . In many cases, before initiating dissolution, the relevant state body will issue a notice to the organization, providing an opportunity to review and rectify the identified violation within a specified timeframe . These operational regulations are in place to ensure that non-profit organizations operate within a clear legal framework, prevent conflicts of interest, maintain distinct identities, and uphold the integrity of the sector. The balance between granting autonomy in internal affairs and setting boundaries for legal and ethical conduct allows for a diverse and responsible non-profit landscape in Armenia.
7. Taxation of Non-Profit Organizations in Armenia:
In Armenia, the general rule is that non-profit organizations, irrespective of whether they pursue philanthropic goals, are subject to taxation by the State Revenue Committee . However, the tax code includes specific provisions that take into account the non-profit nature and activities of these organizations.
7.1 Income Tax:
While non-profit organizations are subject to taxation, their gross income can be reduced by the costs associated with the services they provide or other necessary expenses, although this reduction is capped at 0.25% of the gross income . Importantly, certain financial activities that are intrinsic to the nature of non-profits, such as charitable transfers, the collection of membership fees, and the provision of services directly related to their mission, are generally not considered taxable income . If a non-profit organization engages in income-generating business activities, the profit derived from these activities must be used solely for the purpose of achieving the organization’s statutory goals . This profit is then subject to the standard corporate income tax rate in Armenia, which is currently 18% . This approach to income tax reflects an attempt to support the core missions of non-profit organizations by exempting related income while ensuring that any commercial ventures they undertake contribute to the state’s revenue.
7.2 Value Added Tax (VAT):
The standard rate for Value Added Tax (VAT) in Armenia is 20% . However, a 0% VAT rate is applied to donations made for philanthropic, religious, and charitable purposes, provided that these donations are directed to philanthropic organizations that are implementing programs specifically qualified as “charitable” by the Humanitarian Aid Commission (HAC) . Furthermore, the charitable programs themselves, rather than the charitable organization as a whole, are eligible for tax exemption, including exemption from VAT and customs tax, upon approval by the HAC . To obtain this “charitable program” status, the organization must submit a detailed description of the program along with all necessary supporting documentation to the HAC for their review and approval . It is also important to note that non-profit organizations in Armenia may be required to register as VAT payers and charge 20% VAT on the goods, work, and services they provide if their annual turnover exceeds 115 million Armenian drams (approximately 270,000 EUR). In such cases, VAT is only applicable to the amount exceeding this threshold. If an organization’s income surpasses this limit in a given year, it will be obligated to become a VAT payer in the following year and charge VAT on any income that is subject to taxation . The VAT exemption for charitable donations and approved charitable programs serves as a significant incentive for philanthropic activities in Armenia, effectively reducing the financial burden on such initiatives. However, the existence of a VAT registration threshold for non-profit organizations underscores the importance of careful financial management and monitoring of turnover to ensure compliance with tax regulations.
7.3 Other Tax Considerations:
The legal framework in Armenia, specifically the Law on Charity and the law on VAT, does not impose any limits on the monetary value or the quantity of services or goods that can be donated to recipient organizations for philanthropic purposes . Nevertheless, the government maintains a mandatory oversight role regarding all philanthropic programs . This oversight likely serves to ensure accountability and the proper use of funds designated for charitable activities. Additionally, both cross-border and local donations, as well as grants awarded for the implementation of charitable programs, particularly those received from foreign missions operating in Armenia, are eligible to be received without incurring VAT or customs costs . This provision aims to facilitate the flow of philanthropic resources, both domestically and internationally, to support charitable endeavors within Armenia.
8. Post-Registration Obligations and Operational Considerations:
Following the successful registration of a non-profit organization in Armenia, there are several ongoing obligations and operational considerations that must be addressed to ensure continued compliance and effective functioning. While not always explicitly mandated, it is generally recommended that the organization opens a corporate bank account to manage its financial transactions efficiently . Obtaining a company seal is not legally required but may be advantageous for certain official documents and business activities . A crucial step is to register the organization with the online portal of the Tax Revenue Committee as a taxpayer to fulfill all tax obligations . Within 40 days of the initial registration, and subsequently on an annual basis before February 20th, all businesses, including non-profit organizations, are required to submit a declaration about their real (ultimate) beneficiaries through Armenia’s online portal . If the organization intends to hire employees, it must comply with all relevant Armenian labor laws, which include regulations regarding employment contracts, the acquisition of necessary work permits for foreign employees, and the proper management of payroll . Maintaining meticulous and accurate financial records, including all receipts, invoices, bank statements, and payroll records, is essential for ensuring compliance with financial regulations and for facilitating any potential audits . Above all, the organization must continuously adhere to the principles and regulations outlined in its own charter and all applicable Armenian legislation governing non-profit organizations . These post-registration obligations and operational considerations are vital for the long-term sustainability and legal standing of the non-profit organization in Armenia. Establishing robust internal processes for financial management, reporting, and adherence to all legal requirements is crucial for ensuring accountability and maintaining the organization’s ability to effectively pursue its mission.
Table 2: Summary of Required Documents for Registration
| Document | Public Organization (NGO) | Foundation |
|---|---|---|
| Application for State Registration | Required | Required |
| Protocol of Founders’ Assembly/Decision on Establishment | Required (Assembly) | Required (Assembly or Sole Decision) |
| Charter (Number of Copies) | At least two | At least two |
| List of Founders/Founders’ Information | Required (Detailed Passport Info) | Required (Detailed Info) |
| State Duty Payment Receipt | Required | Required |
| Passport Information of Founders/Director | Required | Required |
| Written Agreement Between Founders (if applicable) | Required | Required (if multiple founders) |
| Consent for Use of Name (if applicable) | Required | Required |
| Other Specific Documents | As per law | May include government decree/community decision |
Экспортировать в Таблицы
Table 3: Ongoing Compliance Requirements
| Requirement | Frequency | Applicable to (NGO/Foundation/Both) | Relevant Authority |
|---|---|---|---|
| Annual Activity Report | Annually (May 30th for NGOs, July 1st for Foundations) | Both | State Revenue Committee |
| Mandatory Audit | Based on funding/asset threshold (10 million AMD) | Both | State Revenue Committee |
| Notification of Address Change | As needed | Both | State Registry of Legal Entities |
| Tax Registration | Once after initial registration | Once after initial registration | Tax Body |
| Declaration of Real Beneficiaries | Annually (before February 20th) | Both | Online Portal |
Экспортировать в Таблицы
9. Conclusion:
The formation and registration of a non-profit organization in Armenia, whether as a Public Organization (NGO) or a Foundation, involves a structured legal process rooted in the constitutional right to freedom of association. Potential founders must carefully consider the distinct characteristics and requirements of each legal form to select the one that best aligns with their organization’s purpose, membership model, and operational objectives. The process necessitates meticulous preparation of all required documentation and strict adherence to the registration procedures established by the State Registry of Legal Entities. Understanding the specific timelines and potential reasons for refusal is crucial for a smooth registration process. Furthermore, the ongoing success and legal standing of a non-profit organization in Armenia depend on its commitment to fulfilling all post-registration obligations, including annual reporting, potential audit requirements, and adherence to the operational regulations and tax laws of the country. By navigating this process with diligence and a thorough understanding of the legal framework, individuals and groups can effectively establish and operate non-profit organizations that contribute meaningfully to the social and economic fabric of Armenia.