Before starting a business in the IT sector in Armenia, it is essential to understand the stages involved. Being informed and familiar with their nuances will allow you to achieve success. Armenian legislation provides several requirements governing the entire process of activity in the IT field, from establishing the necessary legal status to granting privileges to entities operating in this sector. Additionally, IT companies in Armenia play a significant role in the country’s economic growth and technological advancement, offering opportunities for collaboration and innovation.
Who can engage in IT business activities in Armenia?
To operate in the IT sector in Armenia, you must first register a company in Armenia (or be a participant in one) or register as an individual entrepreneur. This means you face the decision of whether to form a company or register as an individual entrepreneur. Each option has its own advantages and risks, and the best choice depends on the specifics of your planned activity.
If you decide to establish a company, the next question is which legal structure to choose. The most common forms in Armenia are joint-stock companies and limited liability companies (LLC). Each form has its benefits and risks, and the decision should consider the characteristics of your business and the relationships among its founders.
In addition to these considerations, there are other factors to address before establishing a company in Armenia, such as the tax systems provided by Armenian legislation, opening a bank account, and selecting legal and accounting services.
What tax benefits does Armenian legislation provide?
Armenia’s newly enacted legislative reforms, set to take effect on December 4, 2024, introduce pioneering incentives aimed at creating an equitable environment for high-tech businesses. Effective January 1, 2025, eligible technology companies—regardless of size—will gain access to unified support programs. Highlights include workforce incentives, such as a 60% income tax rebate for salaries of newly hired employees and foreign specialists during 2025, transitioning directly to migrant workers starting in 2026.
In addition, firms prioritizing innovation and R&D will benefit from 50% government coverage of training and upskilling expenses, along with a reduced turnover tax rate of 1%. Updated profit tax rules also offer more favorable treatment for tech-related expenditures, promoting sustained investments in research and development.
These extensive reforms position Armenia as an attractive hub for launching or scaling tech startups. Eliminating size-based company distinctions enables both emerging and established businesses to seize these opportunities. Combined with a stable and growth-focused regulatory framework, these policies enhance Armenia’s competitiveness, appeal to global investors, and help companies recruit top-tier talent worldwide. There has never been a better moment to establish or grow your business in Armenia’s vibrant tech ecosystem.
The legislative updates in Armenia, effective December 4, 2024, introduce significant incentives for company registration, particularly within the high-tech sector. From January 1, 2025, updated regulations offer unprecedented opportunities to businesses registered in Armenia, supporting startups and established companies alike.
Key highlights include:
- Workforce Benefits: A 60% income tax rebate for salaries paid to new hires and foreign professionals in 2025, making Armenia an ideal choice for team expansion.
- Innovation Boost: Companies focused on R&D will receive 50% government support for employee training costs and enjoy a reduced turnover tax of 1%, enhancing the advantages of establishing a business in Armenia.
- Simplified Profit Tax Rules: New regulations ensure favorable tax treatment for high-tech investments, encouraging consistent innovation and development.
These reforms make Armenia an increasingly attractive destination for company registration, fostering a competitive and investment-friendly environment for both domestic and international firms. Now is the ideal time to incorporate a company in Armenia and leverage these transformative incentives.
What employment requirements are specified in labor law?
Hiring foreign workers requires obtaining a work permit. Employers must submit an application through an electronic platform managed by the state migration authority. A work permit also facilitates obtaining temporary residence status in Armenia.
Certain exemptions apply under the “Law on Foreigners,” such as for family members of accredited diplomats or performing artists on short-term visits. Citizens of EAEU member states are exempt from work permit requirements.
How can IT companies protect their products from misuse?
The success of IT companies heavily depends on protecting their products from unauthorized use. In Armenia, these products can be protected under intellectual property laws as:
- Copyrighted works,
- Patented inventions,
- Trade secrets,
- Trademarks.
Each protection mechanism has specific features, enabling comprehensive safeguarding of IT products.
What guarantees are provided for foreign investors?
Foreign investors enjoy legal protections under Armenian law. For example, they may choose to apply the legislation in force at the time of their investment for up to five years, and foreign investments cannot be nationalized or expropriated except under extraordinary circumstances with full compensation.
What guarantees are available for equity investments in joint-stock companies?
Under the amended “Law on Joint-Stock Companies” effective May 2024, SAFE (Simple Agreement for Future Equity) contracts can be used for equity investments. These agreements outline conditions under which funds may be returned to investors, with or without interest, if specific terms are not met.
In conclusion, conducting IT business in Armenia involves a series of sequential steps. By understanding their specifics, you can organize your operations effectively and make optimal decisions. Our legal team is ready to assist you at every stage, providing high-quality legal advice based on years of experience.
