Armenia is a developing country located in the neighborhood of Iran, Azerbaijan, Turkey and Georgia. A small state with a unique culture, tremendous history and well-preserved traditions, Armenia is increasingly gaining popularity among foreigners, in particular due to the simplified procedure for incorporating new companies and the availability of free economic zones (FEZs) which offer preferential tax regimes. Registering a company in Armenia is simple – no specific requirements for the size of the authorized capital or any mandatory requirements in terms of availability of a resident shareholder.
Offshore Pro Group will be happy to take on all administrative and organizational aspects of incorporating a company in Armenia, providing a full package of documents on the future of the company are available. We are here to help foreign investors to set up business in Armenia in shortest time, without the need to take multiple lengthy and costly flights to visit the country in person. The cost of our service starts from 3800 EUR; if there is a legal entity among the founders, the price will start from 4800 EUR.
Incorporating an LLC in Armenia: Brief outlook of the country’s economy
A landlocked country located in the Caucasus, Armenia has marked a tangible growth rate on GDP in 2019: thus, for comparison, GDP for the first half of 2019 reached 2.7 trillion Armenian drams (approximately 5.6 billion USD) against 2.5 trillion Armenian drams for the same period of 2018 (according to ArmInfo). The European statistical organization (Eurostat) confirms highest growth rate of GDP in Armenia among European countries.
Also, the Caucasian state has a remarkably well-developed tourism industry, which contributes to a constant increase in tourist flow. According to TourStat, for the first half of 2019, the inflow of vacation tourists increased by 30 thousand people compared to the first half of 2018. The country was listed among the TOP10 countries in terms of growth in the number of foreign tourists, taking 9th place in the ranking of the most popular tourist destinations.
These are far from all attractive aspects motivating non-residents to register a company in Armenia in the form of LLC. The state has free economic zones: new enterprises registered there are offered the benefits of a preferential tax system Also, a company in a free economic zone is not required to hire residents to fill vacant jobs.
Here are some of the other advantages of the Armenian jurisdiction for foreign investment:
- Comprehensive and Enhanced Partnership Agreement between EU and Armenia allows to simplify the export of products while reducing transportation costs;
- upon registration of the “Made in Armenia” certificate, manufacturers of products and/or providers of services are granted the right to supply goods to the markets of the EU, China, EFTA, Ukraine, Georgia, as well as the CIS countries;
- Armenia takes pride in a large number of startups, specifically in IT sector, that are increasingly in need of an inflow of capital for further development and innovations;
- Since 2015, Armenia has been a member of the Eurasian Union, which provides access to the market of manufactured goods / services with more than 1 billion consumers, and also allows duty-free import of raw materials from Belarus, Kazakhstan, Kyrgyzstan and other EAEU members;
- the government’s policy is aimed at combating corruption and bureaucracy, as well as ensuring substantial suppression of criminal/monopolistic aspects in economy, which significantly contributes to enhanced investor confidence, protection of their assets and investments in the long run. It may also help the investor reduce costs of mandatory insurance of property, business or other assets, by relying on the state protection of investments.
Foreign investors who have intention to incorporate a company in Armenia, need to know that according to the current legislation, company name of the future enterprise should not have analogues with the names included in the register of existing companies. The company name is registered simultaneously with the process of registering the company.
Note: if a non-resident needs to register a company in Armenia using national symbols or names in the company title (for example, “Armenian”, abbreviated “ARM”, etc.), it is necessary to obtain the preliminary approval of local authorities. A state duty applies for using the word Armenia (or derivatives) in the company name.
Incorporating an LLC in Armenia: registration procedure
Incorporating an LLC in Armenia is a relatively inexpensive procedure: this form of entity envisages a limited liability of shareholders (founders) without the risk of losing their own property for the company’s debts. The incorporation of a new entity is carried out in the State Register of Legal Entities of the Ministry of Justice of Armenia. Simultaneously, the company is assigned a taxpayer identification number and is provided with corporate seal (stamp).
Our lawyers will prepare the necessary package of documents for submission to state bodies without the need for your personal presence in the territory of Armenia. You can remotely open a company in Armenia in 1-2 business days. Timing depends on the type of company incorporated. E.g. size of the payable state fee in standard procedure for registering a company is 8,000 Armenian drams (about 17 US dollars), fee for opening a branch in the Armenian jurisdiction is 12,000 Armenian drams (about 25 US dollars).
What you need to know when incorporating a company in Armenia in 2020?
The policy of the Armenian government is aimed at creating a positive business environment. The government is striving to attract wide range of potential investors which will contribute to the country’s economic growth and export capacities, among other benefits. In terms of foreign capital investments, businesses of other countries are not required to attract residents as shareholders: founders can be non-resident individuals and legal entities with 100% ownership of assets.
Specific requirements for LLC registration in Armenia in 2020:
- complete absence of limitations in relation to the minimum size of the authorized capital. It can start from as low as 1 EUR;
- when using country’s name and derivatives, proper names of cities and other settlements in the company name of the entity being registered, a state duty is applicable in the amount of 600,000 Armenian drams (approximately 1,250 US dollars) annually;
- to check uniqueness of the registered company name, you need to refer to the website of the Intellectual Property Agency or the State Register (the name obtained during registration is exclusively the property of the entity owner);
- the legislation allows the involvement of nominal directors to manage the newly established company in Armenia;
- this particular legal form of entity, i.e. LLC in Armenia, can be incorporated with even one single shareholder.
Our lawyers are here to help you though the entire process of registering a company in Armenia in 2020. With our lawyers, you will not need to learn Armenian language (the official language of the state, in which all documents are required to be filled out in a mandatory order) or the Armenian legislation, as we will take care of all mandatory filings. Important notice – apostille and legalization of documents are not required if the company is registered by a citizen of the CIS countries. Namely – Belarus, Ukraine, Tajikistan, Russia, Azerbaijan, Georgia, Moldova, Kyrgyzstan, Uzbekistan, Turkmenistan (in accordance with the Minsk Convention on Legal Relations).
Incorporating an LLC in Armenia: list of documents
The procedure for registering a company in Armenia does not imply the personal presence of all founders or a single founder, in order to submit documents to state bodies. Our lawyers can register a Limited Liability Company for you, providing availability of the following documents:
- foreign passport of the founder of the company (if the owner is an individual);
- legalized copies of corporate documents – the charter of the company, the minutes of the meeting of shareholders with a decision on the establishment of a legal entity in Armenian jurisdiction;
- receipt of payment of state duty;
- amount of authorized capital;
- data of participants (if the number of shareholders is more than one) with copies of passports, TIN; or charters, if the founder is a legal entity(ies);
- legal address.
Additionally, you will be required to open a corporate account with a bank in Armenia, as well as indicate the type (types) of planned activities.
Non-residents can establish a company in Armenia at a cost starting from 3800 EUR (the amount may vary depending on the type of participant structure stipulated in charter – whether established by an entity or individual). The price includes standard translations of documents into Armenian and notary services. The payment does not include the costs of acquiring a legal address, state duties and fees, or other expenses associated with the stay of the owner in Armenian jurisdiction.
Incorporating an LLC in Armenia: what a non-resident needs to know about the tax system
LLC in Armenia in 2020, depending on whether it is attributable to small, medium or large business, may receive a preferential tax treatment. Medium and large companies are subject to general taxation, which includes:
- 20% Corporate Income Tax (CIT);
- 20% VAT (value added tax).
If the registration of an LLC in Armenia is performed to conduct a restaurant, car dealership, retail, transport, dental or entertainment business on a small scale, you can pay a patent tax – this is a fixed fee that is paid monthly and replaces CIT and VAT. There is also a taxation regime in Armenia when a company pays turnover tax. Enterprises with an annual revenue of not more than 58.53 million drams (about 121 thousand USD) are entitled to use this form of taxation. Turnover tax rate ranges from 1.5% to 5%, set individually depending on type of business.
Also, registration of an LLC with foreign participation in Armenia may take the form of a family business. In this case, the company is exempt from VAT if the annual turnover is less than 18 million drams (about 37 thousand US dollars).
Additionally, companies in Armenia are obliged to pay income tax on salary. From 1 January 2020, new income tax rates have come into force. Now a flat rate is applied, i.e. both low and high wage earners in Armenia will have to pay a flat 23% income tax.
Previously, taxation was three-tiered, with different levels of income tax set for low, middle- and high-income earners. Those with salary up to 150,000 drams paid 23 percent of their salaries, those with salary between 150,000 and 2 million drams – 28 percent, and those who received more than 2 million drams – 36 percent. Starting from January 1, 2020, monthly income will be taxed at 23 percent in 2020; in 2021 and within the next 2-3 years, the rate will decrease by one percentage point each year, and by 2023, the income tax on individuals will be taxable at 20 percent.
There will also be changes in funded pension rates, but these will become effective from January 1 2021. So, starting from July 2020, the amount of the social allowance will be 2.5% if the monthly salary is less than (or equal to) 500,000 drams; 10% less 37,500 if the monthly salary is more than 500,000 drams. The difference between the cumulative allocations made and the social payments calculated and transferred (collected) from the incomes of such persons may not exceed 37,500 AMD per month.
So, in 2021 from the beginning of year, the amount of the social contribution will be 3.5% if the monthly salary is less than (or equal to) 500,000 drams; and 10% less 32,500 if the monthly salary is more than 500,000 drams. The difference between the funded contributions and the social payment calculated and transferred (charged) from the income of such persons may not exceed 32,500 AMD per month.
From the beginning of 2022, the amount of the social contribution will be 4.5% if the monthly salary is less than (or equal to) 500,000 drams; and 10% less 27,500 if the monthly salary is more than 500,000 drams. The difference between the cumulative contributions made and the social payments calculated and transferred (charged) from the income of such persons may not exceed 27,500 AMD per month.
Other duties, fees and taxes are paid by the company when conducting a certain type of business requiring state licensing or permission (environmental tax, excise tax, transport and real estate tax, etc.).
Incorporating a company in Armenia: taxation of IT start-ups
Foreign investors who have a unique business idea or wish to participate in existing IT start-ups in Armenia should familiarize themselves with the innovative approach adopted by local authorities to promote development of IT companies. Thus, starting May 18, 2019, a corporate tax exemption has been applied for companies involved in information technology. To benefit from this tax incentive scheme, you must apply for an IT Startup certificate, which will also reduce the income tax for employees (up to 10%). An IT Startup certificate can be obtained at the Ministry of the Information Technology Industry for all Armenian companies, who have no more than 30 employees.
Incorporating an LLC in Armenia: Step by step guide for a non-resident
If you have made up your mind to incorporate a company in Armenia in the form of LLC, please contact our lawyers at the email firstname.lastname@example.org, to start preparing the complete package of documents for the future entity in 1-2 business days. The registration process is as follows:
- a non-resident applicant contacts our lawyers at email@example.com;
- our consultant coordinates and discusses with you all aspects related to the future operation and incorporation of your company;
- the applicant sends to our consultant the required package of documents;
- the applicant pays for services in the amount of 3800 EUR, if the company participant structure will be comprised of individuals only, and 4800 EUR if there are legal entities among the founders;
- we launch the registration process after notarization and apostille verification of the documents received.
Foreigners should also take into account that the time periods for registration of a company in Armenia may increase due to the requirement to translate and apostille all the documents which are in foreign language.
Additionally, we will be happy to assist you in the following procedures:
- rental of commercial real estate with an objective to obtain a legal address;
- opening accounts in an Armenian bank (personal, corporate);
- acquisition of residential real estate with subsequent rental, resale or for your own inhabitance;
- accounting support of the company in the Armenian jurisdiction;
- transfer/redomiciling of an operating business;
- obtaining a residence permit and permanent residence in Armenia, etc.
For all questions, please contact us at firstname.lastname@example.org.