Region: Western Asia
Subregion: Armenian Highlands
Start of Week: monday
currency code: AMD
languages official: Armeniancrbg
Nestled in the Caucus region, this landlocked country of three million people has a rich history dating back nearly 3,000 years. Despite having been occupied by different groups such as the Sasanians, Mongols, and Seljuk Turks, Armenia has largely retained its homogenous identity and Christian heritage.
Moving into the 20th century, Armenia was part of the Soviet Union until its demise in 1991. However, during that time it occupied an important niche as a tech hub, a tradition that continues to this day thanks its educational policy based on the Science, Technology, Engineering, and Mathematics (STEM) sectors. It should be no surprise that many European and Russian companies have a physical presence in the country, taking advantage of its talented labor pool.
Whether you are looking for investment opportunities or a place to live, here’s why Armenia should be on your list of countries to consider.
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Companies and Structures
Despite being a small country of three million people, Armenia is an attractive place to operate a business. It gets excellent marks in the World Bank’s Ease of Doing Business Index in several important areas, most notably starting and registering a business, and enforcing contracts. Prior to the Covid-19 pandemic, Armenia had been one of the fastest growing economies in Europe, with growth averaging 7% a year. Part of that growth has been driven by the IT sector thanks to the government adopting business-friendly policies along with a highly skilled and low-cost workforce. It should be no surprise that Armenia is often referred to as the “Tiger of the Caucuses”.
Registering a Business
When we say it is easy to register a business in Armenia, we were not joking. Thanks to the “one-stop shop” window, the entire process takes no more than three days (in some cases even or one day). Even better is how little it costs, free for most types of businesses and minimal fees for branches of foreign firms. In addition, the application does not have to be submitted in person, it can be done online or through an appointed representative.
Cost: Free. 50,000 AMD ($25) for a branch of a foreign firm.
Required documents: copies of passports for all owners (or shareholders), corporate documents, and articles of incorporation. All foreign documents must be apostilled (or legalized) and translated to Armenian.
Rules on ownership: There are no restrictions on citizenship or residency. Foreigners may own (or invest) in a firm and are not required to reside in the country. There are no local partnership requirements.
Physical presence: A registered business must have a legal address. This can be a residence or provided by a lawyer.
Primary Business Structures
A sole proprietor is just that, a business with a single owner and the rules are similar to those in many western countries. It is the easiest business entity to set up and operate although there are some disadvantages, namely incurred debt by the business can extend to the proprietor’s personal assets. As such, this structure is best suited for small or individually run businesses.
- Advantages: Easy to set up and operate, no taxes on dividends, simplified accounting, and some tax benefits.
- Disadvantages: Business liabilities can extend to the owner’s personal assets.
Partnership (General and Limited)
A partnership is similar to a sole proprietorship with the exception the ownership is shared between two or more individuals. Likewise, liabilities can extend to the partners’ personal assets. The main advantage to this business structure is flexibility and like a proprietorship, they are subject to fewer legal requirements than corporate entities.
Limited partnerships operate in a similar manner except there are general and minority partners. The main difference is liability, where the limited partner is only liable for the amount they have invested in the business.
Advantages: More flexibility and subject to fewer legal requirements than an LLC or JSC.
Disadvantages: Can be more difficult to manage, liabilities can extend to personal assets for general partners.
Limited Liability Company (LLC)
This is the most common business structure in Armenia, and it offers a few benefits over a sole proprietorship. The most obvious is liability as shareholders are only liable for the amount they have invested in the company. Likewise, thanks to the business-friendly approach taken by the Armenian government, an LLC is fairly easy and inexpensive to maintain and operate.
Other benefits are the director does not have to reside in Armenia and the creation of an executive board is optional. Shareholders may sell their investment at any time and claim a refund that is equal to the value of their shares.
- Advantages: Limited liability, no residency requirement for the director and shareholders, internal auditors are not required if there are fewer than 21 shareholders, board of directors is optional.
- Disadvantages: May not have more than 49 shareholders and subject to more legal formalities than a sole proprietorship.
Joint Stock Corporation (Open and Closed)
This business structure is ideal for medium to large enterprises with multiple shareholders. Like an LLC, investors are only liable up to the amount they have invested in the company. However, a JSC offers an additional advantage over an LLC, namely privacy. The shareholder registry of a JSC is not made public and can only be revealed under a court order.
Another benefit of a JSC is additional means of raising capital. Likewise, they can issue different types of shares such as preferred, common, voting and non-voting. JSC can also be run by a single director if there are no more than 50 shareholders. However, having an internal auditor or audit committee is required.
Note: The main difference between an open and closed joint stock corporation has to do with the sale of shares. In the latter, shareholders have the preemptive right to purchase shares as opposed to the former they do not have that right.
- Advantages: Ideal for larger enterprises with multiple investors, more options to raise capital, shareholder registry is not made public.
- Disadvantages: Subject to audit requirements and more legal formalities than an LLC, board of directors is mandatory if there are more than 50 shareholders.
Armenia has a simplified, standard corporate tax rate of 18% and a VAT of 20%. However, depending on the size of the business and the sector it operates in, there are several tax incentives programs that may apply.
Small businesses with annual sales of less than 115 million AMD (appx. $240,000) USD qualify for a turnover tax ranging between 1.5% to 5% of sales. They do not have to pay the corporate tax or VAT.
Micro businesses with annual sales of less than 24 million AMD (appx. $50,000 USD) are exempt from the corporate tax and VAT. However, businesses must meet certain criteria to qualify for this category.
Businesses in the above categories are required to withhold payroll taxes from employees based on the following scale.
- Income tax: 22% flat rate (20% as of 2023)
- Social Security: 3.5% for monthly salaries up to 500,000 AMD(appx. $1000)/month and 10% for salaries between 500,000 and 1,020,000 AMD(appx. $2000)/month. The maximum salary amount for social security is capped at 1,020,000 AMD/month.
- Military taxes (contributions to insurance fund for service members): Between 1,500 and 15,000 AMD/month ($3-31 USD) depending on the employee’s salary.
Special Tax Incentive Programs
The Armenian government also has tax incentives for businesses operating in the IT sector and the Free Economic Zones (FEZ’s).
IT Start-Up Certificate
This program applies to startup businesses in the IT sector and there are several criteria that must be met.
- Requirements: Must operate in the tech sector and related industries (programming, data processing, consulting, data management). Firms cannot have more than 30 employees and may not be a branch or subsidiary of a foreign firm.
- Benefits: Exempt from corporate taxes until January 2023, payroll taxes are reduced to 10% instead of 22%.
Free Economic Zones (FEZ’s)
- Benefits: No VAT for goods and services provided in the FEZ, tax-free profits, no property taxes on buildings that are owned or leased in the FEZ, no customs duties on materials imported in the FEZ, free convertibility of foreign currency.
In addition, firms operating in an FEZ may be foreign owned and there are no requirements for local partnerships. However, they are required to withhold payroll taxes from worker’s salaries (income, social security, and military).
The Benefits of Operating a Business in Armenia
- Business Registration: Takes no more than three days with minimal fees and there are no capital requirements or renewal fees. Firms are not required to hire employees, have an office, or open a bank account.
- Low taxes: Armenia has a flat, standard corporate tax rate of 18%. Dividends are taxed at 5% and there are treaties ruling out double taxation with 47 countries. In addition, no taxes on capital gains, gifts, inheritance, and net worth.
- -Privacy laws: There are strict secrecy laws that cover certain types of corporate entities and bank accounts, and this information can only be revealed by a court order. Also, Armenia is not subject to the CRS reporting requirements.
- A skilled and low-cost workforce: Armenia has long been known as a tech hub in the Caucasus region thanks to an emphasis on education in the STEM sectors. The average monthly wage is approximately $400/month.
- Stability and economic growth: Armenia had one of the highest GDP growth rates in Europe, around 7% a year (pre-Covid). Armenia is also part of the Eurasian Economic Union and has free-trade agreements with the CIS countries and GSP status with the EU.
- No restrictions on ownership: Foreigners may own a firm or invest in it. There are no residency or local partnership requirements.
With a low cost of living and the capital city of Yerevan being one of the safest in Europe, why not live in Armenia? Not to mention, fairly lenient requirements for residency and it is no surprise Armenia has been a popular destination for freelancers and expats alike. Applying for residency or citizenship is fairly simple like many government processes in Armenia with little paperwork and bureaucracy to complicate the process. Not to mention the road to citizenship can take as little as three years.
Types of Residency Permits
There are three types of residency permits in Armenia: Temporary, Permanent, and Special. They are granted for a year, five years, and 10 years respectively and can be renewed indefinitely. While a resident is required to have a physical address in the country, there are no residency requirements so an individual may remain outside the country while accruing time for citizenship eligibility.
Obtaining residency by Owning or Operating a Business
This is a popular option for obtaining residency and it is easy to do. However, keep in mind the business should be established prior to applying for a residency permit (like on a visitor visa). Here are some things you should know about applying for a residency being a business owner/investor.
- Can be a proprietorship, LLC, JSC, or investor.
- Few restrictions on business activities, including freelancing or working from home. However, you will need to provide evidence demonstrating the capability of providing the goods/services of the business. For example, if you plan on owning a shop that makes furniture you will need to provide proof of having a workspace, tools, materials. A freelance consultant will need to demonstrate they have clients, proof of work, payments for services.
- No need for a work permit if you are working for your own business and no requirements to have employees (local or foreign).
- No minimum capital, income, or turnover requirements. However, income from business activities should be sufficient to cover living expenses.
Other things to keep in mind are the business entity should have a physical presence, be operational, and pay taxes in Armenia. If the applicant is unable to demonstrate the above, chances are the petition will be rejected.
Temporary Residency Permit
A temporary resident permit (TRP) is issued for a year, and it may be renewed indefinitely but keep in mind you must submit the application at least 30 days before your visa or residency permit expires. In addition, you will need to demonstrate a valid reason for requesting a TRP such as a work permit, owning/operating a business, studying, and the means of supporting yourself or your family.
Fees and Requirements
- Pay a fee of 105,000 AMD (appx. $220).
- Completed application.
- Three 35x45mm color photos.
- Passport (with a copy notarized and translated in Armenian).
- Medical Certificate.
- Parents, spouse, and children are eligible.
The completed application is then submitted to the Passport and Visa Department of the Armenian Police in Yerevan (OVIR). The processing time is usually 30-45 days.
After three years of being a temporary resident you may apply for permanent residency and in the case of marriage to an Armenian, it may be done after two years. The main qualifying categories for permanent residency are marriage and work or business activities in the country.
Fees and Requirements (same as the TRP except for the following)
- Pay a fee of 140,000 AMD (appx. $300).
- Proof of residency.
- Parents, spouse, children, brothers/sisters, and grandparents are eligible.
The processing time is the same as a temporary residence permit, 30-45 days.
This category usually applies to ethnic Armenians that were born abroad although exceptions are sometimes made for foreigners that are involved in economic and cultural activities inside the country. This permit is valid for 10 years and allows the holder to legally work, study, and own land in their name without having to establish a legal entity. It also serves as a path to citizenship and a Special Residency holder may after three years.
Fees and Requirements
- Pay a fee of 150,000 AMD (appx. $300).
- Eligibility for family members is the same as a permanent residency permit.
The processing time is about 60 days, and it can be filed remotely through a power of attorney.
The final step for many is citizenship and the qualifying categories are similar to a permanent resident. They are, marriage to an Armenian, Armenian descent, through residency, or by exception.
Marriage to an Armenian Citizen: The marriage has to be officially registered for at least two years and you must have resided in the country for at least a year or have a common child who is an Armenian citizen.
Being of Armenian Descent: This category applies to ethnic Armenians that were born abroad. While they are exempt from the language and residency requirements, they must prove their ethnicity. This is usually done through baptism certificates or government documents stating Armenian ethnicity.
Residency: Having been a temporary or permanent resident for at least three years. In addition, the applicant must demonstrate fluency in the Armenian language and be familiar with the Constitution of the Republic. This requirement does not apply to ethnic Armenians.
By Exception: This special category must be approved by the president, and it is not granted often. Usually, it involves a contribution that improves the welfare of the country such as a large donation or creating jobs. There is no legal definition of the amount that qualifies but there have been cases of it being granted to individuals who have invested more than $100,000 or donated $50,000 in the country.
All citizenship applications must be approved by the President of the Republic, and they may be denied without explanation and cannot be appealed. However, you may reapply after a year. A citizenship petition may be filed remotely or through a power of attorney.
Requirements for Citizenship
Obtain the necessary documents: Birth certificate, marriage certificate, ethnicity documents. They may need to be apostilled/legalized and translated to Armenian.
File the petition: This must be done in person (either at an Armenian Consulate abroad or at the OVIR office in Armenia) and you may have to take test demonstrating knowledge of the Armenian Constitution.
Obtaining an Armenian Passport
Obtaining an Armenian passport is straightforward and can be done in as little as a day if you opt for the fast-track option. If not, it is usually processed in three weeks. While the application can be submitted at a consulate abroad, you will have to visit Armenia to complete it in person.
Requirements for an Armenian Passport
- Register with the military office: Applies to males below the age of 50.
- Submit the passport application: The standard processing time is three weeks but can be obtained in as little as a day for a fee of 20,000 AMD (appx. $40).
- Take the oath of allegiance.
Advantages of Citizenship over Residency
Here are a few of the advantages of citizenship over residency.
- Armenia permits dual citizenship.
- Insurance policy: Having a second passport can be thought of as an insurance policy. For example, if the situation in your home country becomes worse due to poor economic policies or conflict, a second passport is a “Plan B”. Other reasons may be due to taxes and you would need a second passport if you plan on renouncing your citizenship.
- Armenian citizenship can be passed on to future generations even if they are born outside the country.
- Free movement within the Eurasian Economic Union (EAEU). Like the European Union, Armenian citizens can live and work in other EAEU countries such as Russia and Belarus.
- The naturalization process is cheap and fast. If you are eligible to receive citizenship it usually does not cost more than a few hundred dollars and applications are generally processed in less than six months Likewise, there are few required documents and no need to obtain criminal background checks, proof of address, or tax returns.
- Armenian citizens may own agricultural, forest, or other types of land that are often restricted from foreigners that are residents. In addition, they are eligible for government programs like free education and healthcare.
Becoming an Armenian resident or citizen has a lot of benefits. It is a stable country, and the capital of Yerevan is one of the safest major cities in Europe. Not to mention, it has one of the fastest growing economies in the region and there are plenty of opportunities for investment. Armenia also has a high standard of living and there are no minimum income requirements for a residency permit. Likewise, citizenship can be obtained in as little as three years with no residency requirements. You can live elsewhere and visit to complete the citizenship process. In some cases, it can be granted by investing in the country or by making donations with amounts that are less than other citizenship by investment programs.
Becoming a resident of Armenia has tax benefits as well. There are no capital gains taxes on the sales of securities, real estate, and other assets if the sales occurred outside the country. Insurance and pensions payments are also exempt from taxes. In addition, you may be able to declare yourself a non-resident of your home country and lower your tax liabilities.
Real Estate and Investments
It is no secret that Armenia ranks highly as a place to do business thanks to a stable government and prudent economic policies. In addition, it has been one of the fastest growing economies in the Eurasian Economic Union (EEU) over the last decade averaging around 7% a year prior to the Covid-19 pandemic. Unsurprisingly, the same can be said for the real estate market and here we are going to tell you about some of the investment opportunities Armenia has to offer.
Armenia has experienced steady economic growth over the last two decades thanks to its economic stability and prudent economic policies. At the same time, the government has fostered business-friendly policies (including tax laws) to attract FDI. Being a small country of around three million people, most of the economy is oriented towards the services sectors, especially IT.
Over the last 10 years, overall economic growth has been positive with the exception of 2019 due to the Covid-19 pandemic. As you can imagine, positive economic growth also means opportunities for growth in the real estate market which we will cover in more detail below.
Office Real Estate
With a highly skilled and low-cost workforce, Armenia has become a popular outsourcing destination for many European and Russian companies, especially in the tech and IT sectors. As such, there has been a high demand for office real estate in Yerevan, especially in the central business district. This is where many of the main government offices and the shopping district are located. In addition, many domestic and international telecoms and IT companies have offices here as well.
For commercial real estate, it is usually broken down into three categories, Class A, B, and C with the majority of the first two located in the business district of Yerevan. As for the main differences between them, Class A offices are typically newer and more centrally located than B. Likewise, they typically offer more amenities. Class C offices offer many of the amenities of A and B but they are usually located outside of the city center.
Below are some of the major business centers that are located in Yerevan and what you can expect to pay per square meter.
KAMAR Business Center (Class A)
Centrally located in Shahumyan Square, this is a nine-story BREEAM certified business center, and it is one of the newest in Yerevan with a total space of 23,100 sq/m.
Elite Plaza (Class A)
Located next to the Armenian Central Bank, this 18-story building is the largest office complex in the capital comprising 24,000 sq/m.
Piazza Grande and Yerevan Plaza (Class A)
Also located in the business district, these new business complexes are home to many small and medium-sized domestic and international firms.
IT Park, Viasphere Technopark, Eraz (Class C)
Located outside of the downtown area, these complexes offer many of the amenities of their Class A counterparts and are ideal for larger operations like call centers and manufacturing.
Class A: €20-25/m²/month
Class B: €15,5-20/m²/month
Class C: €8,5-13,5/m²/month
As you can see, office space is fairly cheap although there has been considerable demand due to the booming tech sector from international firms, especially for centrally located Class A and B office space.
Tourism and Real Estate
This is another industry that had been experiencing growth prior to the Covid-19 pandemic.
While the majority of tourists are from neighboring Iran, Georgia, and Russia there recently have been more coming from Western Europe and the US. However, it can be said the tourism industry is underdeveloped and depending on your point of view, being a tourist or an investor can be a good or bad thing. At Privatus Maximus, we like to think of it as a good thing as it means there are opportunities for investment and here is why.
Steady increase in visitors: Prior to the Covid-19 pandemic, the number of visitors had been steadily growing over the last five years with many repeat visitors. While many come to visit family, Armenia is a popular destination due to its culture, history, and natural beauty.
Safe and Affordable: Armenia is not only affordable, but it is renowned for being one of the safest countries in the region. Likewise, it is a popular destination for remote workers.
Underdeveloped tourism sector: While this may not be good news for visitors who prefer all-inclusive vacation packages, it represents an opportunity for businesses that offer them. Likewise, foreigners can own land and have the same rights as locals.
Residential Real Estate
This is another growing industry in the country and from 2018-2019 alone the values of residential properties in central Yerevan increased by 34.5%. In addition, yields for rental properties have been steadily increasing thanks to the increase in tourism and the growing expat population. Despite the rising prices, many ideal areas in the capital are more than affordable. As noted earlier, foreigners can own property along with renting it out and in 2019, 12% of all real estate purchases were made by foreigners.
What does this mean? Well, Armenia is an affordable place to live so it is ideal for anyone looking to relocate or for investment opportunities. At the same time, (and with tourism starting to increase again), there will be a growing demand for Airbnb and rental properties that are orientated towards remote workers.
Advantages of Owning Property in Armenia
Foreigners can buy, sell, and rent out their own property and have the same rights as locals and a residence permit is not needed for property ownership. At the same time, you may qualify for a residency permit by owning real estate. High appreciation rates and rental yields: Property values and rental yields have been steadily increasing the last few years. In addition, the growing tourism sector means opportunities for rental incomes. Fast and easy registration process: Like many government processes in Armenia, registering property is simple and straightforward. Not to mention, it can often be done in as little as a few days. Low taxes: There are no gift or inheritance taxes. In addition, there are usually no capital gains taxes on the sale of individually owned property with low annual taxes. Taxes on rental income are 10% for amounts under 58.35 AMD (appx. $120,000) a year.
Armenia is the safest and most stable CIS country. At the same time, the economy has been steadily growing thanks to its business-friendly government policies. In addition, the highly educated and low-cost workforce has attracted many IT and tech firms from Europe and Russia. As such, it has created many opportunities in the commercial and residential real estate markets.
After the collapse of the Soviet Union, Armenia has made significant steps in economic, cultural and political progress. Yerevan hereby became the regional center for political, economic, financial and cultural events in the country and the region.
Armenia has registered continuous strong economic growth since 1995, while the inflation has been negligible for the past few years. New sectors, such as precious stone processing, jewelry making, and communication technology are steadily growing year on year. This steady economic progress has earned Armenia increasing support from international institutions. The International Monetary Fund (IMF), World Bank, EBRD, as well as other international financial institutions (IFIs) and foreign states are extending considerable grants and loans to the country.
Armenia joined the World Trade Organization (WTO) in January 2003. Additionally, Armenia has also managed to tackle inflation, stabilize its domestic currency and privatize most small and medium-sized enterprises.
According to official preliminary data, Armenia’s GDP grew by 7.6% in 2019, which is the largest recorded growth since 2008. At an 8.3% growth rate, Armenia has also recorded the highest degree of GDP growth compared to the rest of the Eurasian Economic Union (EEU) countries in 2018 (January–June). These figures, along with Armenia’s economy reaching a nominal GDP of $11.5 billion per annum and GDP per capita growth reaching over 9.5% in 2019, present strong evidence to suggest that a high demand for a World Trade Center in the capital is present.
Furthermore, Armenia’s PPP produced the sixth highest results worldwide, growing at a total of 356% per capita since 2000. This, along with GDP growth totaling at 40.7% between 2012 and 2018, as well as assets and credit exposures almost doubling, suggest that a World Trade Center in Yerevan would mutually increase trade opportunities for existing WTC members.
The 2021 budget, adopted in November 2020, focuses on Armenia’s priority to defense and security, social protection, health, education, and infrastructure development (repair and construction of roads). These policies provide an economic incentive for further privatization, mobilization of investments and an improvement of legal regulation in these areas. The restoring of peace in the Nagorno-Karabakh region has made this one of the Government’s highest priorities. This new treaty is expected to generate a new wave of optimism, economic growth and opportunity for the Armenian state.
TOP 10 EXPORT INDUSTRIES
Ores, slag, ash: $665.1 million (25.5% of total exports) Gems, precious metals: $414 million (15.9%) Tobacco, manufactured substitutes: $290.5 million (11.1%) Beverages, spirits, vinegar: $290.2 million (11.1%) Iron, steel: $149.7 million (5.7%) Clothing, accessories (not knit or crochet): $124.2 million (4.8%) Aluminum: $99.6 million (3.8%) Mineral fuels (including oil): $68.9 million (2.6%) Optical, technical, medical apparatus: $55.7 million (2.1%) Clocks, watches (including parts): $40.3 million (1.5%)
Armenia’s top 10 exports accounted for 84.2% of the overall value of its global shipments. Optical, technical and medical apparatus production represents the fastest growing industries among the top 10 export categories, up by 188.3% from 2018 to 2019. The second highest exported industry, by sales, was the gems and precious metals industry. This had a 34.7% gain, with gold and precious metals scraps being the most highly exported commodities, while Armenia’s shipments of beverages, spirits and vinegar registered the third-fastest gain in value (up by 26.4%). Finally, the industry which has declined the most among Armenia’s top 10 export categories was unknit and non-crocheted clothing and accessories, which dropped by -21.2% year on year.
From the more granular four-digit Harmonized Tariff System code level, copper ores and concentrates represent Armenia’s most valuable exported product; at 24% of the country’s total. In second place were cigars, cigarillos and cigarettes (10.5%), trailed by alcoholic spirits and liqueurs (9.6%), gold (8.6%), iron ferroalloys (5.5%), thin aluminum foil (3.6%), precious metals waste (3.4%), electrical energy (2.5%), unmounted and unset diamonds (2.1%) and lastly jewelry (1.6%).
Also, Armenia is known for being affordable and expats from Russia, Europe, and the US have relocated here. At the same time, the tourism industry has been experiencing growth and there are opportunities here as well.
This can be thought of in two ways. First, there are people looking to buy property and it can be held onto as a long-term investment and then resold later at a higher price later. Additionally, there is money to be made with rental properties that can be marketed towards tourists and expats.
While not considered a tax haven by any means, Armenia is often regarded as the “Switzerland” of the Caucuses thanks to its business-friendly policies, macroeconomic stability, and strict bank secrecy laws. Despite being a developing country, Armenia has long been one of the most stable countries in the region with a well-developed financial sector.
With that said, Armenia is welcoming of foreigners and in most cases (for individuals) all you need is a passport and a completed application. The bank fees for non-residents are usually the same as those in European banks, like Cyprus. Many banks will allow a third party to submit the application under a Power of Attorney (POA).
Benefits of Banking in Armenia
- Stability: Armenia has been one of the fastest growing and most stable economies in Europe thanks to its business-friendly and prudent macroeconomic policies. The financial sector is well-developed, regulated, and has not experienced any major crisis in recent times. The diversified economy of the country and decreasing dependence on Russia as a key destination for Armenia’s exports start brining definite business advantages.
Armenia and the European Union are guided in their relations by the Comprehensive and Enhanced Partnership Agreement between the EU and Armenia (CEPA). It was signed on November 24, 2017 and entered into force on March 1, 2021. The document lays the foundation for mutually beneficial cooperation in various areas: strengthening democracy, human rights and the rule of law, creating new jobs and business opportunities, adopting fair legislation, enhancing safety and security, improving the environment, improving the quality of education and increasing opportunities for research.
- Variety: the banking sector is well-represented with a mix of foreign and domestic firms. The prominent fact proving the reliability of the Armenian banking sector is that for the whole history none of the banks was deprived of its license.
- Strict Bank Secrecy Laws: it is a crime to release bank account information without a court order. Armenian banks are not subject to CRS requirements although you may be required to report foreign bank accounts per your home country’s laws.
- Deposits: Many banks accept foreign currency deposits such as USD, EUR, RUR, JPY, GBP, to name a few. Not to mention, offer time deposits (usually in USD, RUR) although availability (and acceptance) of foreign currency will vary by bank.
- Remote opening: a person can open an account in an Armenian bank without coming to the office, totally remotely. The interviews with the bank representatives are held via such platforms as Zoom.
Aside from accepting deposits in a number of foreign currencies, Armenian banks offer the same services you would expect from a bank in any western country. As such, they offer a wide range of options for international clients. All banks offer deposit insurance backed by the Central Bank in the following amounts: up to 16 million AMD (appx. $33,000) for AMD deposits and up to 7 million AMD (appx. $14,000) for foreign currency deposits.
These are the typical services you can expect from an Armenian bank:
- Online banking: you can manage your account, make payments, and transfer money from anywhere in the world.
- For businesses: there are payment services (including online) that are available and usually provided by banks at the European standard rates. Visa and MasterCard are widely accepted throughout the country.
- International transfers and remittances can be done following all the international requirements regarding KYC, AML, etc.
- Bank deposit boxes can be obtained for a minimal fee, as low as 30,000 AMD (appx. $15) a year for a small box in some banks. This is an ideal option for safeguarding valuables such as expensive jewelry and certificates.
- The private banking is currently under development, so the main purpose is making bank transfers and payments.
The Armenian banks work together with professional brokers and investment companies and some of them do bring good returns. This is an attractive option for individuals that are looking for a secure, interest-paying investment.
The banks can open brokerage accounts and the clients make buy investment products through brokers that open access to both local stock exchanges like Armenia Securities Exchange and international ones, like NASDAQ.
Many banks offer time deposits in several currencies such as the USD, and RUR. However, local currency (AMD) deposits have better returns and as of June 2021, the rates are as high as 10% for a one-year deposit. In comparison, a USD deposit from the same bank pays 2.5%.
Also keep in mind interest income is taxed at 10%.
How to Open a Bank Account?
For an individual account, it is simple and straightforward, not with too many documents involved. However, keep in mind there are general international guidelines as each bank may have their own requirements. You may also be asked the reason for opening an account and the source of the funds.
- For foreigners that do not reside in Armenia (or do not have residency): You will usually just need your passport and signed application, a proof of address, CV, source of funds. All documents should be presented in the copies of the originals certified by apostil. The process can be completed in person, remotely or by a third party under a power of attorney. It can take as little as 30 minutes or a few days if further checks or verifications are needed.
- Corporate accounts: opening a corporate account is straightforward although you will be required to submit some extra documents, namely copies of passports for the director and all shareholders along with the corporate registration documents. All the compliance, AML, KYC requirements are strictly followed by the Armenian banks.
Like individual bank accounts, it can be done through a third party. Also keep in mind many banks may not permit you to open an account if the company does not have a physical presence in the country.
As noted earlier, Armenian banks are not subject to CRS although they must comply with FATCA requirements. In addition, you may be required to fill out additional forms and report the bank account information to your home country.
Lastly, all the banks in Armenia don’t do business with nationals (or entities) from countries that are under international sanctions such as Syria or Iran. If the above situations apply, it is advised to contact the bank or consult with a lawyer prior to opening an account.
One might think that opening (or maintaining) a bank account in Armenia is costly. On the contrary, there are minimal fees with low deposit requirements. Monthly maintenance fees are usually no more than 12,500 AMD (appx. $25). In addition, for current accounts you will be issued a Visa or MasterCard that can be used just about anywhere in the world.
Why Opening a Bank Account in Armenia?
There are several reasons why one may be interested in opening a bank account in Armenia.
Armenia offers security for your assets and many banks accept deposits in foreign currency. Not to mention, they pay decent interest rates, albeit not as high for AMD deposits. Opening an account is a simple and painless procedure and can be done through a third party. It does not get much easier than that, and Armenian banks offer all of the amenities and services you would expect from a bank in a developed country.
Perhaps the biggest advantage of banking in Armenia are the strict secrecy laws. It is a crime to reveal a client’s bank information without an Armenian court order. Likewise, it does not have a negative reputation as an offshore banking center like some countries. That is not to say Armenia is the “Wild West” and there are no rules. There are laws pertaining to money laundering and you will often need to provide proof of where the funds came from.
Corporate accounts will typically receive more scrutiny if they do not have a physical presence in the country. Lastly, Armenia is not subject to CRS requirements although that does not exclude foreign nationals from their home country’s reporting laws if applicable.
When it comes to asset protection and wealth management, Armenia is an ideal “plan B” for individuals and corporate entities. With a stable, well-developed banking sector and strict privacy laws there is a reason why Armenia is regarded as the “Switzerland” of the Caucuses.
Are you interested in opening an Armenian banking account? If so, we offer a full range of services and can assist you with opening your account.
This is the main page for the government of Armenia with information about the major ministries, structure of the government, services offered, and how to contact the respective agencies. It is available in Armenian, English, and Russian.
Ministry of Foreign Affairs (mfa.am) This is the primary webpage for the Ministry of Foreign Affairs, and it has all of the necessary information regarding visas, passports, and residency permits. It is available in Armenian, English, French, and Russian
Ministry of the Economy (mineconomy.am) The Ministry of the Economy has information about economic indicators. In addition, it is in charge of licensing for certain activities that require a special permit such as mining.
Ministry of Finance (minfin.am) The Ministry of Finance is in charge of taxes, audits, and activities that require a license like casinos, gambling, and lotteries.
Ministry of Justice (moj.am) This is the government website for legal information, laws, and legal proceedings.
Ministry of Territorial Administration and Infrastructure www.mtad.am/en/ This agency is in charge of the local government and land related issues although some of the links are in Armenian only.
Useful Government Web Pages Online E-portal Electronic Government of the Republic of Armenia
This is the primary E-government portal, and you can contact the government, along with links to access decrees, pay taxes, and apply for a visa. It is an excellent starting point and useful for someone new to Armenia and is available in English and Armenian.
Apply for an E-signature e-Governance infrastructure implementation agency (ekeng.am)
This webpage allows you to apply for an E-signature which is required for completing some online transactions.
Electronic Register Electronic Register, Government of Armenia (e-register.am)
The Electronic Register is the primary portal for registering a business in Armenia. You can also search the register to see if a name is already in use. The page is available in Armenian, English, and Russian.
Legal and Judicial Information DataLex JUDICIARY PORTAL
Datalex is the judicial webpage where you can research court cases and laws. In addition, you can view the court hearing schedule and follow up on any legal proceedings.
Paying for Business Licenses, Taxes, and Visas State electronic payment system (e-payments.am)
This is the state electronic payment system, and you can pay for the majority of government services like licenses, fines, taxes, and visas. It is available in Armenian and English only.
Registering Intellectual Property Intellectual Property Office (aipa.am)
The Intellectual property office is for registering any intellectual property.