Redomiciliation to Armenia

Continuing our series of articles on redomiciliation, today we will focus on a jurisdiction such as Armenia.

Armenia is located in the southwestern part of the Caucasus, at the crossroads of Europe and Asia. This mountainous country is rich in natural resources such as copper, iron, gold, silver, aluminum, and other rare metals. Armenia maintains strong economic ties with Belarus and Russia within the framework of the Eurasian Economic Union (EAEU).

If the legislation of the company's current place of incorporation allows for its redomiciliation, such redomiciliation is possible in Armenia. The provisions on the redomiciliation of a company from a foreign jurisdiction to Armenia are stipulated by the Civil Code and the Law of the Republic of Armenia “On state registration of legal persons, state record-registration of separate subdivisions, institutions of legal persons and individual entrepreneurs”. The redomiciliation of companies from Armenia to any other foreign jurisdiction is also allowed. 

Redomiciliation of a company to Armenia offers some advantages:

Favorable tax regime 

In Armenia, a company can choose between a simplified taxation system (STS) or a general taxation system (GTS). A company can apply STS if its annual sales volume does not exceed 115,000,000 Armedrams (approximately 296,000 U.S. dollars). Under STS, the company pays only a turnover tax, ranging from 1.5% to 25%, depending on the type of activity. This means that VAT and corporate income tax are not applicable.

If the annual sales volume condition is not met, the company must apply GTS and in this case it pays corporate income tax at the rate of 18% and VAT at the rate of 20% (when exporting goods and services, VAT is 0%).

IT companies with an IT certificate are granted certain tax benefits, particularly on payroll income tax, which is reduced to 10% instead of the standard 20%.

Dividends are taxed at a rate of 5% (for both residents and non-residents).

Possibility of obtaining a residence permit in Armenia

Business owners, provided that their company is opened and actually operates in Armenia, can obtain a residence permit in Armenia, and there is no requirement of permanent physical presence in Armenia for its validity. In addition, the family members of the business owner can subsequently obtain a residence permit in Armenia.

Favorable investment climate and integrations 

Armenia offers the possibility of free repatriation of capital and profits, allows foreigners to own land, and encourages investments through tax incentives and government support programs.

Additionally, Armenia is a member of EAEU and has free trade agreements with CIS countries, Norway, Switzerland, Japan, and Canada. In 2018, Armenia concluded the European Union-Armenia Comprehensive and Enhanced Partnership Agreement, significantly facilitating cooperation and trade between Armenia and EU countries.

Steps to redomicile to Armenia 

The process of redomiciliation is a rather lengthy and complex procedure, as it requires gathering documents and information both in the country of the company's original incorporation and in the country, to which the company is moving, in this case, Armenia.

In the country of original incorporation, it is necessary to prepare corporate documents, notify creditors of the redomiciliation, conduct an audit, and obtain certificates from government authorities confirming the absence of debts related to taxes, insurance contributions, and other obligations. Once all required documents are collected, the registrar will issue the company consent to redomicile to another country.

Similarly, in Armenia, a set of documents and information must be gathered in order for the Agency of the State Register of Legal Entities of Armenia to issue a Certificate of Continuation for the redomiciled company.

Overall, the process of redomiciling a company to Armenia consists of two stages:

Pre-registration  

At this stage, close co-operation with the Agency of the State Register of Legal Entities of Armenia is initiated, the name of the company to be redomiciled is agreed upon, the main type of activity of the company in Armenia is determined, and documents are collected, prepared and submitted to the Agency of the State Register of Legal Entities of Armenia. These include the application for pre-registration, the decision of the authorised body on redomiciliation, information on the director of the company, a document confirming the payment of the state duty (10,000 Armenian drams or approximately 26 U.S. dollars) and other documents. 

If the company has provided all necessary documents and there are no grounds that would exclude its redomiciliation to Armenia, the Agency of the State Register of Legal Entities of Armenia will conduct the pre-registration of the company, issue an extract from the register and provide a preliminary Certificate of Continuation.

Registration 

In order for the Agency of the State Register of Legal Entities of Armenia to register a redomiciled company, it is necessary to provide it with documents confirming the termination of the company's registration in the country of initial incorporation. Based on this document the agency directly registers the company in the register in Armenia and provides a Certificate of Continuation.

Costs of redomiciliation to Armenia are  

  1. Expenses directly related to the company’s redomiciliation procedure: 
    • fees for consultants in the country of initial incorporation and in Armenia for the support and preparation of documents for the redomiciliation of the company;fees for auditors in the country of initial incorporation for the preparation of financial statements and obtaining certificates confirming the payment of all taxes and other payments to the state budget.
       
  2. Expenses related to the maintenance of the company after its redomiciliation to Armenia:
    • office rental costs (having office space is mandatory at least for receiving various official correspondence and notifications);
    • expenses for opening a bank account, including its maintenance;
    • expenses for the company’s director (the director can be either a legal entity or an individual – resident/non-resident; if the director is an individual non-resident (not a citizen of the EAEU), a work permit will be required; for opening a bank account in Armenia, the personal presence of the director and their social card will be necessary)
    • costs for an accountant; 
    • other expenses that may arise directly during the company’s operations in Armenia. 
       

Overall, redomiciliation of a company to Armenia represents a unique opportunity for cross-border relocation of a legal entity to a member state of the EAEU.

The REVERA team of lawyers has the necessary experience in incorporation and redomiciliation of companies in various jurisdictions. Our own Legal Panel in Armenia allows our clients to receive seamless service for relocating their corporate structure to Armenia and other countries.

Disclaimer: This publication offers general insights and should not be construed as legal advice. Companies are encouraged to seek tailored legal advice for their specific redomiciliation needs.

Authors: Egor Zelianouski (e.zelianouski@revera.lega), Darya Sadovskaya 

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