Key benefits of setting up a business in Armenia in 2020

It is possible to register a company in Armenia within 1-3 working days without the need to undergo a separate tax registration process. A small yet economically steady and stable country, after the Velvet Revolution Armenia has undergone a rapid development in many industries. Today, numerous global organizations, institutions and communities place Armenia among the countries where it is beneficial to do business, which is especially true for start-ups and technology companies. Providing proper facilitation and support from the local government continues, Armenia is very much likely to become the next innovation hub in Europe. 

Setting up business in Armenia is also lucrative option in terms of the country’s location: it provides an opportunity to access new markets, including the countries of the Middle East, Europe and Asia. At the same time, the republic is characterized by a simplified procedure for registering companies and obtaining special permits / licenses for certain types of activities.

Attention! Are you looking to urgently open an account in a foreign bank or register a new legal entity in another jurisdiction? Leave an urgent message in the online chat or contact our experts now with a service request via email at info@offshore-pro.info.

Some of the key advantages for doing business in Armenia 

A closer look at this small country in the South Caucasus reveals that the country is interesting for doing business in many terms, in particular – with the availability of free economic zones. Thus, Armenia has four operating FEZs, where companies are completely exempt from the majority of taxes, have an ability to optimize day-to-day maintenance and administration costs, and become eligible to benefits in terms of customs duties.

Please note, however, that it is possible to register a company in Armenia on the territory of one of the FEZs only with a preliminary permission from the authorities, therefore, legal assistance is needed in the preparation of documents to be submitted to the state bodies. It should also be borne in mind that all documents must be translated into Armenian, legalized and apostilled.

Other advantages of doing business in the Republic of Armenia include opportunities to deploy economic activity on a local and international scale, in particular:

• foreign entities/persons and citizens of Armenia have equal rights, both in terms of registering a company and in the process of conducting business;
• Armenian legislation allows to establish a legal entity without attracting local capital (100% of the authorized capital may belong to foreign individuals / legal entities);
• the above-mentioned FEZs are equipped with all the necessary infrastructure, which makes it possible to exclude temporary and financial losses in the search for office and auxiliary premises;
• foreign investors have access to any organizational and legal forms of business permitted by the legislation of the Caucasian country;
• Armenian jurisdiction allows opening a business with capital starting from 1 EUR and with the number of shareholders starting from 1 person (including for a legal entity);
• high level of confidentiality of beneficiaries, shareholders (nominee service is allowed);
• complete absence of requirements for the creation of new jobs (except for situations when a foreigner applies for Armenian citizenship by investment);
• the ability to register a legal entity / individual with a corporate bank account.  

With regard to taxation, Armenian companies can benefit from a reduced profits tax rate at source (10%); personal income tax from January 1, 2020 is no longer tied to the level of income and is set at the level of 23%. VAT in the country is paid at the rate of 20%, except for the activities of companies located in the territory of RA free economic zones (full exemption).

Organizational and legal forms of companies in Armenia

The Republic of Armenia allows the registration of a company in the form of a limited liability company, joint stock company (closed, open), partnership, individual entrepreneurship and other, less popular forms of doing business. The form of limited liability company for several years in a row has been the most popular form among foreign investors and businesses. Under this organizational-legal form the liability of participants is determined by the shares in the authorized capital.

You can register a company (LLC) in Armenia subject to the following conditions: 

• unique name of company according to the records in the government bodies of the RA;
• company name should not be identical to those of any currently operating international organizations, should not contain words / abbreviations offensive and contrary to spiritual values;
• the amount of the charter capital can be as low as 1 euro;
• documents are translated into Armenian, certified by a notary, apostilled;
• presence of a legal address in the Armenian territory (it is allowed to use the home address / residence address as a corporate mailing address).

Establishing a legal entity in the country does not require a large number of shareholders; one person can act as a shareholder. According to the Armenian legislation, you have the right to use the services of nominated shareholders, you are not required to attract local capital, and you can be using national names in the name of the company providing you pay a special fee to that end (about 1,200 euros per year).

Attention! Apostille and legalization of documents is not required if the foundation of a company is carried out by a legal entity/ individual with citizenship of the CIS: Ukraine, Belarus, Tajikistan, Georgia, Moldova, Russia and other countries (the full list is indicated in the Minsk Convention on Legal Relations). 

More advantages of Armenia as a country for doing local and international business

Given the maximum reduction in the cost of transporting products / goods, your company will  benefit from privileges established by EU-Armenia Enhanced Partnership Agreement. This agreement allows your expedited entry to new markets, as well as operating without obligatory payment of customs duties (in some cases – full exemption, in other cases – tangibly preferential regimes). Having the “Made in Armenia” certificate significantly increases the competitiveness of your products and allows you to freely export goods to the markets of the European Union, China and other countries.

Registration of a company in Armenia is no less attractive for foreigners wishing to deploy activities in innovation areas. Thus, the country has a large number of different start-ups that require additional funding or foreign direct investment. In addition, foreign businessmen will not undergo compulsory observation upon arrival in the country, since a legal entity can be opened remotely, without the mandatory presence of the main applicant.

In this case, a notarized power of attorney is drawn up in the name of our Armenian representative, who will deal with organizational and registration issues. If you need to open a corporate account in a bank of Armenia, this process involves a mandatory visit as the bank will require personal identification of the client at the bank’s premises.

State registration of legal entities in Armenia

The republic is one of the few countries in Europe that has established  minimum time for setting up new companies. In some cases, a business can be opened within one day, if all documents are correct and properly prepared. As for the registration of companies in Armenia on the territory of the FEZ, here the time required may significantly increase, as the applicant initially submits a short-term and long-term business plan to the RA government, which is subject to approval or rejection.

When deciding to establish a business in Armenia, it is important to take into account some of the legal intricacies, which particularly include:

• individuals and legal entities of the RA have commitments towards communities in which they operate;
• registered companies have the opportunity to acquire rights, own property by right of ownership, protect legitimate interests and rights at the legislative level;
• foreign investments in Armenia are protected by the state;
• the body conducting the registration of new entities is the State Register of Legal Entities;
• some companies in Armenia are registered by the Central Bank (those doing business in the field of financial, insurance, brokerage, investment, credit services);
• an application for opening a new company can be submitted to any division of the registration agency, irrespective of the location of legal address;
• applications can be submitted by the founders and heads of the company’s executive body;
• when a lawyer / attorney is appointed to represent the business interests, a power of attorney is issued to the latter by the founder / executive body of the legal entity.

Please note that the application for registration of a company in Armenia is a sample template which is made available to you at the agency’s office.

As for special types of activities, where permits and licenses are required, they are initially drawn up, and then submitted to the register together with the package of documents required for registration of a legal entity.

Citizenship by Investment when establishing a company in Armenia

This is another interesting and attractive advantage of the Armenian republic, which allows you to go through the naturalization process as quickly as possible in this country. At the moment, the legislation of the Republic of Armenia does not clearly describe the minimum investment or other conditions, the fulfillment of which will lead to the receipt of an Armenian passport. However, legal practice suggests that Armenian citizenship has already been issued to a large number of foreign investors (including from Ukraine, Iran, Russia, Tajikistan, Kazakhstan, etc.) for investing in the country’s economy and creating new jobs. An interesting aspect of obtaining such citizenship is the complete absence of requirements for the knowledge of the Armenian language, which is a prerequisite in all other cases (by marriage, by residence). Read more about the possibilities of obtaining an Armenian passport  and privileges which come by it.

Popularity of Armenia among foreign investors in 2020

Quarantine measures and restrictions negatively affected many economies and in particular, limited the freedom of movement of foreigners. Therefore, we decided to draw your attention to the opportunity to freely visit Armenia when applying for a residence permit, and in the future – citizenship of the country. The main investor has the right to apply for Armenian citizenship, which is considered directly by the Prime Minister of Armenia. After passing through the naturalization process, family members of the investor are entitled to submit their own applications based on the family reunification procedure.

This scheme is beneficial in terms of opportunities to further facilitate cross-border access for yourself and your family – you will be able to travel to Armenia as full citizens of this country without additional documents. As for business opportunities, the country is particularly attractive, in terms of large number of economic agreements with other countries that simplify the export and import of goods, as well as significantly expand the sales markets. For example, membership in the Eurasian Economic Union (since 2015) gives unlimited access to the billion-dollar EAEU consumer market. At the same time, membership in the EAEU allows you to import raw materials and materials from Belarus, Kyrgyzstan, Kazakhstan and some other countries without any duties and taxes.

In conclusion, we add that registration of a company in Armenia is a quick and relatively affordable procedure. If your business does not require corporate services at a local bank, in most cases you will not have to visit Armenia personally. Your Armenian company will receive a registration certificate and the right to start business literally in 1-3 days from the moment of submitting the application and all the necessary documents.

Write to our experts at info@offshore-pro.info, if you need to establish a business in the RA, open an account in a local bank, take part in the program of investment citizenship of Armenia. If necessary, we will select residential and commercial real estate, develop an optimal business structure for international tax planning, help with paperwork for the company and for submitting mandatory reports.