Starting a Business in Armenia

Swift and Effortless Registration: Armenia offers ultra-fast, one-day registration for businesses with sample documents, while customized or remote registrations take just one to three business days. A registration certificate with a taxpayer ID number is swiftly provided, enabling immediate operations.

Affordable Setup and Maintenance: With no minimum capital requirements and an option for a nominal paid-up capital of $1, Armenia ensures cost-effective registration. No government fees accompany company registration or renewal, eliminating recurring reporting costs. Inactive entities are exempt from taxes and tax filings, while obligations like office rental, local hires, or compulsory bank accounts are non-existent.

Foreign Ownership Freedom: Armenia welcomes foreign ownership without constraints. Full ownership can be held by foreigners, exempt from local partnerships or agents. Citizenship or residency of shareholders poses no limitations. Non-resident directors and employees, even sole foreign directors, can manage and wholly own companies without local presence mandates.

Residence and Citizenship Avenues: Operating or owning an Armenian company can open paths to various residency statuses for you and your family. Three years of residency under general naturalization rules can lead to Armenian citizenship eligibility.

Advantageous Tax Regime: Micro-businesses, IT startups, entities in economic or industrial zones, and more qualify for zero-tax status. Companies with annual sales of less than 115 million drams (approx. $299,000) incur sales (turnover) tax of 1.5-5%. Dividend taxation at 5% is flexible due to numerous double-tax treaties, while capital gains on asset sales remain untaxed. Additionally, gifts, inheritance, net worth, and insurance/pension payments incur no taxes.

Privacy and Credibility: Selecting the right corporate structures or using nominee services is possible for ownership privacy. Armenian bank secrecy is law-protected and disclosing it is a crime. As of 2022, Armenia does not participate in CRS automatic exchange of information (AEOI). Armenia does not appear on any list of offshore jurisdictions, lending to its positive image and credibility. The country has an up to date anti-money laundering legislation, and the Central Bank has ensured the safety, stability and good reputation of the banking system.

Skilled Workforce and Low Labor Costs: Armenia offers a highly educated, skilled workforce with a 99.7% adult literacy rate. Multilingual universities contribute to a qualified labor pool. The minimum monthly wage stands at $195, while the national average is approximately $690.

Economic Growth, Integration, and Diaspora: In 2022, Armenia's GDP grew by 12.6%. Membership in the Eurasian Economic Union (EAEU), WTO, and free-trade agreements with CIS countries, Canada, Japan, Norway, and Switzerland position Armenia favorably. The global Armenian diaspora, numbering 7 million, enriches the country's resources.

Investment-Friendly Environment: Armenia ensures free repatriation of capital and profits, allows foreign land ownership, and encourages investments through tax incentives and government aid programs. Extensive double taxation and foreign investment protection agreements strengthen Armenia's investment appeal.

Choosing the appropriate business structure entails a comprehensive assessment of both tax and non-tax considerations. These encompass factors like limited liability, establishment and maintenance costs, confidentiality, number of shareholders, managerial framework, and exit strategies.

1. Branch Office (BO): A branch office is a territorial division of a foreign enterprise operating within Armenia. It doesn't exist as a separate legal entity but rather serves as an extension of the foreign company. For proper functioning, branch offices established in Armenia need to undergo registration with the State Registry and obtain a taxpayer identification number.

2. Subsidiary: A subsidiary involves the establishment of a locally registered company (LLC or JSC) that is either fully or partially owned by a foreign corporation. All aspects of corporate operation are governed by Armenian law. Importantly, the limited liability structure ensures that creditors of the subsidiary cannot lay claim to the assets of foreign shareholders.

3. Representative Office: A representative office, akin to a branch office, functions with the key distinction that it cannot conduct business activities. Rather, its purpose is confined to representing the interests of the foreign entity within Armenia. Operating a representative office mandates registration with the State Registry and acquisition of a taxpayer identification number.

4. Permanent Establishment: The concept of a permanent establishment revolves primarily around taxation. It materializes when a foreign company maintains a significant business presence within Armenia. The decision to establish a permanent presence is predominantly driven by tax considerations. The Tax Office oversees the registration of permanent establishments and issues corresponding taxpayer identification numbers.

When the central goal of establishing a business presence in Armenia revolves around employing local staff, you have the option to explore employer of record services as a viable alternative. This solution offers potential benefits, encompassing cost efficiencies and the mitigation of compliance-related uncertainties. Typically encompassing an array of provisions, such services span the spectrum from recruitment and onboarding to orchestrating local payroll, tax submissions, salary disbursements, and the administration of employee benefits.

Non-profit entities in Armenia are typically founded as either foundations or public associations.

Public Association: A public association operates as a membership-driven entity, primarily catering to its members' needs (e.g. professional associations, clubs, etc.). Oversight of a public association falls to an executive manager (management board) appointed by the members' general assembly.

Foundation: Foundations lack members and are primarily established to fund charitable initiatives benefiting specific groups or society as a whole. Governance of foundations rests with a board of trustees, initially designated by the founders, and an executive manager appointed by the board.

Both foundations and public associations have the capacity to engage in business and revenue-generating activities. Income generated from such activities is subject to regular taxation rates applicable to for-profit establishments. However, fees from memberships, charitable contributions, and other voluntary transfers (monetary and in-kind) directed toward non-profit organizations remain non-taxable. Non-profit entities may choose to create for-profit businesses (LLC, JSC, etc.) to segregate commercial operations from their core pursuits.

Religious Organization: Registering a religious organization mandates obtaining certification from the Council of Religious Affairs, verifying the religion's "traditional" status (based on historical canonized scripture and integration into contemporary religious and ecclesiastical communities), and confirming a membership of at least 200 individuals (excluding minors).

Institution: An institution is a structural or territorial unit established within a legal entity to engage in non-profit endeavors related to education, sports, culture, governance, etc. While an institution has its articles of organization, it doesn't hold legal entity status. Debts incurred by the institution fall under the responsibility of the founding organization.

Non-profit entities in Armenia are typically founded as either foundations or public associations.

Public Association: A public association operates as a membership-driven entity, primarily catering to its members' needs (e.g. professional associations, clubs, etc.). Oversight of a public association falls to an executive manager (management board) appointed by the members' general assembly.

Foundation: Foundations lack members and are primarily established to fund charitable initiatives benefiting specific groups or society as a whole. Governance of foundations rests with a board of trustees, initially designated by the founders, and an executive manager appointed by the board.

Both foundations and public associations have the capacity to engage in business and revenue-generating activities. Income generated from such activities is subject to regular taxation rates applicable to for-profit establishments. However, fees from memberships, charitable contributions, and other voluntary transfers (monetary and in-kind) directed toward non-profit organizations remain non-taxable. Non-profit entities may choose to create for-profit businesses (LLC, JSC, etc.) to segregate commercial operations from their core pursuits.

Religious Organization: Registering a religious organization mandates obtaining certification from the Council of Religious Affairs, verifying the religion's "traditional" status (based on historical canonized scripture and integration into contemporary religious and ecclesiastical communities), and confirming a membership of at least 200 individuals (excluding minors).

Institution: An institution is a structural or territorial unit established within a legal entity to engage in non-profit endeavors related to education, sports, culture, governance, etc. While an institution has its articles of organization, it doesn't hold legal entity status. Debts incurred by the institution fall under the responsibility of the founding organization.

In Armenia, a registered company is mandated to possess a unique business name, affording it exclusive rights to this name. This distinctive business identity is composed of a distinctive word or expression – be it a common or proper name, fictitious name, or a sequence of letters – in conjunction with the company's corporate structure (e.g., ACME LLC). Although altering the business name is permissible, transferring it to another individual necessitates a comprehensive company reorganization.

The utilization of terms like "Armenia," "Armenian," "Arm," and names of Armenian locales mandates the approval of national or local authorities. Notably, a government fee of AMD 600,000 (approx. US$1,563) is applicable for employing "Armenia" or "Armenian" in a business name. Furthermore, a business name must not incorporate terms requiring specific licenses or permits, such as "bank," "insurance," "notary," and similar designations.

It's imperative that a business name isn't identical or confusingly similar to previously registered business names or trademarks within Armenia. For preemptive checks, conducting name searches can be executed through the State Registry and the Intellectual Property Agency websites. While a business name offers exclusive usage rights, you should consider trademark registration as well, as this avenue generally delivers enhanced protection to your business identity.

IWhen registering a company in Armenia, a crucial requirement is to designate a legal address. This designated address serves as the recipient of official correspondences and notifications. Remarkably, there is no obligation to own or lease dedicated business premises within Armenia. Instead, it's admissible to employ your residential address for company registration. In case where you don't have an Armenian address, your legal representative can assist in providing one.

It's important to differentiate the legal address from the actual business location. The legal address, which must be indicated in the company's articles of organization, is reserved for official communications. If changes to the address are implemented, corresponding amendments to the articles are requisite.

Shareholding Flexibility: Armenia offers a favorable environment for shareholding, with no imposed restrictions. Foreign individuals and legal entities have the freedom to hold 100% ownership in Armenian companies, eliminating the necessity of involving local partners, directors, or staff.

1. Dividend Taxation: In cases where formal dividend distribution occurs among shareholders, certain tax considerations come into play. Individual shareholders are subject to a 5% income tax on dividends. Similarly, non-resident corporate shareholders face a 5% withholding tax on dividends, while Armenian companies enjoy exemption from dividend taxation. The 5% rate for non-resident shareholders can potentially be reduced through double tax treaties.

2. Limited Liability Assurance: Shareholders typically enjoy limited liability protection, safeguarding them from losses exceeding their initial investment. This protection extends to personal responsibility for the company's debts. An exception is if shareholders knowingly contribute to the company's bankruptcy.

Management Structure: Typically, Armenian companies are overseen by a singular director, serving as the chief executive officer. This director possesses the authority to act on behalf of the company, with the ability to delegate authority through powers of attorney. While having an upper-level board of directors is possible, it's more common to find this structure in companies with over 49 shareholders. Directors can be individuals or legal entities. Directors and other managers can be held liable for company damages resulting from unreasonable or ill-intentioned actions. They could also face accountability for administrative and criminal offenses linked to mismanagement, including tax evasion, money laundering, immigration violations, etc. Managers may additionally be held liable for deliberately causing the company's bankruptcy. All Joint-Stock Companies (JSCs) and Limited Liability Companies (LLCs) with over 20 shareholders are required to have an internal auditor or an audit committee. 

Please note that a recent legal development took effect on January 1st, 2023. This change mandates that companies established in Armenia must now disclose their real beneficiaries, also known as ultimate beneficial owners. These declarations need to be submitted online through the official platform: https://bo.e-register.am/am/auth. The submission deadline for these declarations is February 20th, 2023. Moreover, the new law stipulates an additional requirement for companies: the submission of annual statements confirming that the real beneficiaries remain unchanged. This annual statement must also be filed by February 20th. By and large, any shareholder holding at least 20% of a company's shares is categorized as a real beneficiary under this regulation. To navigate these new requirements effectively, your appointed representative in Armenia will necessitate a power of attorney (POA) to facilitate company registration on the designated online platform. A scanned copy of the POA will suffice for this purpose.

In 2023, Armenia has eighteen banks catering to both individual and corporate clients, spanning residents and non-residents alike. All these banks are privately owned and governed by Central Bank regulations. Noteworthy international institutions like HSBC share space with local banks infused with foreign investments from countries such as Russia (VTB Bank), France (ACBA-Credit Agricole Bank), Lebanon (Byblos Bank), Argentina (Converse Bank), and Iran (Mellat Bank), among others.

Armenian banks stand out with their commendable customer service, reasonable fees, enhanced privacy measures, and a comprehensive suite of modern banking services, including:

•  Online and mobile banking, along with phone banking
•  Debit and credit cards (Visa, MasterCard, AmEx)
•  International bank transfers and money remittance services
•  Multi-currency accounts (USD, EUR, CHF, GBP, CAD, AED, RUR, JPY)
•  Gold accounts
•  Wealth management and private banking services
•  Secure deposit boxes, among other offerings

Opening a Bank Account: Initiating a corporate bank account setup in Armenia can take a few days or even a few weeks, dependent on the thoroughness of background checks conducted. The option of remote account opening through a power of attorney is also feasible, however, the chances of approval may not be high. The application process necessitates presenting company registration documents, alongside passport copies of directors, shareholders, and ultimate beneficial owners (UBO). Additional documents like proof of address, income source, etc. may also be requested.

Bank Secrecy and Regulations: Armenia upholds strict bank secrecy laws. Unauthorized disclosure of bank information constitutes a criminal offense, leading to potential imprisonment and financial penalties. Ordinarily, court orders are essential for banks to divulge account-related details. Anti-money laundering (AML) guidelines mandate banks to report suspicious activities to the Central Bank. Armenia doesn't partake in AEOI/CRS but has a FATCA agreement with the U.S.

Interest Rates and Taxes: Banks offer interest rates reaching up to 10% for local currency deposits and 5% for U.S. dollar deposits, as of February 2022. The Armenian stock exchange features corporate bonds offering higher yields. Interest income generally incurs a 10% tax rate.

Safety: Safety is a priority, with all banks subject to licensing and oversight by the Central Bank. Deposit insurance from the Deposit Guarantee Fund of Armenia covers bank deposits and account balances up to AMD 16 million in local currency (approximately $41,700) and AMD 7 million in foreign currency (approximately $18,200). Remarkably, this insurance system has never been triggered due to a lack of bank runs in recent history.

Merchant Accounts and Payment Gateways: Merchant accounts and Internet acquiring services are available in Armenia, enabling online payments via VISA and MasterCard cards through websites. Banks often provide necessary software at no cost, sparing merchants additional expenses for programming and certification procedures. Payment gateways like 2checkout are compatible with Armenian bank accounts, streamlining payment processes.

Because of AML requirements it may be difficult or even impossible to open corporate bank accounts for companies that have limited ties to Armenia, e.g. no actual place of business in Armenia. Not all banks work with clients from countries under international or U.S. sanctions (e.g. Iran, Syria, etc.). If the company is owned or managed by a national of one of these countries it is recommended to check the possibility of opening a bank account in advance.

National License

Local License

Notification

Lands in Armenia are classified according to their designated usage (zoning), including agricultural, residential, industrial, energy, forest, and more. Foreigners can directly own household and gardening plots, lands designated for construction and maintenance of a homestead, and residential and commercial development lands. Other types of land, such as agricultural land, can be owned through a legal entity. Special residence permit holders can own all types of land. There are some restrictions on building on agricultural land, although small buildings up to 30 sq. m. are allowed. In most rural communities, structures of up to 300 sq. m. can be built on land exceeding 10,000 sq. m. It may also be possible to change the zoning of land with the help of the local municipality.

If you are interested in agricultural investments, you might consider fruit farming or wine growing, which are one of the oldest economic sectors in Armenia, with over 60,000 active entities in this industry. The most popular forms of cultivation are grape, apricot, and peach. Between 1998 and 2016, the territory of orchards doubled, and the yield increased by 14.5% between 2008 and 2017 due to implementation of innovative technologies. You may choose to buy an existing farm or set up a new one, and you may be eligible for a government subsidy. Two types of subsidies are available: compensation of up to 50% of costs incurred in setting up a vineyard (orchard) or a low-interest rate loan (2%) for a maximum amount of $2.9 million for vineyards, $5 million for orchards, and $4.7 million for berry farms.