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Armenia · Contractor taxation guide · 2026
Hiring in Armenia?
Here’s where
the money actually goes
Start with the calculator: enter what you pay and see how much reaches your contractor. Below it — what each tax takes, the dates that produce rate requests, and what it costs you if Armenia reads the arrangement as employment instead.
General information, not tax or legal advice. Armenia rewrote its turnover tax rates on 1 January 2025 and removed several professional activities from the regime entirely, so treat every number here as a starting point and check the activity code on your own contract.
Three taxes.
Here’s what each one costs
Armenia taxes a registered contractor on revenue rather than profit in most cases, and the contributions come out of their side, not yours. Which regime they are in is decided by the activity code on their registration.
Turnover tax is charged on revenue, not profit. Services sit at 10%, and documented costs can pull that down by up to six points, with a statutory floor of 4.5%. The high-tech registry is a separate regime at 1%.
Today, 2:15pm
Services – 10%
Tomorrow, 11am
With documented costs – floor of 4.5%
Tomorrow, 2pm
High-tech registry – 1%
Contractors carry their own contributions. An entrepreneur on turnover tax pays fixed amounts; on the general regime the pension becomes a percentage. Anyone born before 1 January 1974 sits outside the mandatory scheme.
Today, 2:15pm
Fixed profit tax and social payment – $328
Tomorrow, 11am
General regime – 5% or 10% less $820
Tomorrow, 2pm
Health insurance – $354 a year
Usually nothing on your invoice. Services exported to a recipient outside Armenia are zero-rated, so a contractor invoicing you shows no VAT whether or not they are registered. Registration itself triggers above about $314,000.
Today, 2:15pm
Exported services – 0%
Tomorrow, 11am
Standard rate, domestic – 20%
Tomorrow, 2pm
Registration – ~$314k of turnover
A year in the life
of an Armenian
contractor’s taxes
20 February
The election deadline
Due before 20 February, or within 20 days of registration. Miss it and they sit on the general regime all year, at 23% of profit instead of 10% of revenue — which arrives as a rate request in March.
Every year
The 1% status has to be renewed
Registry entry is granted a year at a time, and depends on 90% of income staying inside the qualifying activities. Lose it and the same work goes from 1% to 10%.
Watch
continuously
continuously
The $314,000 line
Cross about $314,000 of turnover and the regime closes from that moment. On high-tech, no return for a full gap year.
1 November,
then 1 July
then 1 July
The annual declaration lands
Income not taxed at source is declared by the contractor: to 1 November 2026 for 2025 income, then 2 March to 1 July.
Before you sign
Deadlines are the contractor’s problem. The contract is yours — and eight of the nine things Armenia weighs are your decisions. All nine are further down this page.
Are you working
with them legally?
Tick what’s true of your arrangement. There’s no pass mark — Armenia has no numbered statutory test. Classification turns on the substance of the relationship, and courts and labour inspectors weigh the whole picture. These are the things they look at.
You are 75% or more of everything they earn
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You set their working hours
They work from premises you provide or designate
You supply or fund the tools they work with
You direct how the work is done, not just the result
You set their rate and they don’t negotiate it
They sit inside your structure — manager, reviews
They look like your staff from the outside
Over the 75% line. They can now qualify as a TRADE — if they also have no employees, use their own equipment and work differently from your staff. Same tax either way, but a TRADE contract has to be written and registered with the SEPE, and the duty to tell you sits with them.
Three things
to check before
you agree a rate
Which of the four setups they are on, what activity code it rests on, how close they are to a ceiling, and whether they made the February deadline. All four change the number that matters to them.
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Which setup, and whether it’s current
Ask for the state registration certificate, and if they quote the 1% rate, confirmation of High-Tech Registry entry with its renewal date. The registry is annual, so last year’s 1% is not this year’s.
The activity code on the certificate
Management consultancy, legal services and accounting were removed from turnover tax in 2025. Advertising, design and marketing are excluded from the 0% micro regime. Read the code, not the job title.
How close to the ceiling
About $314,000 for the simplified regimes, $65,600 for micro, measured on last year. Crossing the first closes it mid-year; on high-tech it adds a gap year before they can return.
The questions
The eight that come up most when companies hire in Armenia.
Can we hire an Armenian contractor without an Armenian entity?
Yes. A commercial agreement with a registered individual entrepreneur needs nothing from you locally — no registration, no filing, no presence. You do not even withhold, as long as you have no permanent establishment in Armenia, so the whole invoice leaves your account. What you cannot do is run that arrangement like employment.
Who actually pays the tax — us or the contractor?
The contractor. They file and pay their own tax and contributions under whichever of the four setups they are on. An Armenian payer would have to withhold 20% on a payment to an individual; you do not, absent a permanent establishment. Nothing is offset in advance, so their entire bill lands on their side later, and that explains a good deal of rate conversation.
Our contractor is registered as an individual entrepreneur. Is that enough?
Registration is their side of the arrangement, and it counts. It leaves two questions open. Whether their activity code actually permits the regime they are filing under, which changed for several professional services in 2025. And whether the relationship looks like employment, which is mostly your decisions rather than their filings. A properly registered entrepreneur on a contract that reads as employment is still a reclassification case.
What is this 1% tax rate our developer keeps mentioning?
A real regime with real conditions. Law HO-498-N gives qualifying high-tech activity a 1% turnover tax from 2025 to the end of 2031, but it needs at least 90% of income from government-defined activities, turnover under about $314,000, entry in the state High-Tech Registry, no overdue tax, and annual renewal. It also cannot be combined with the payroll incentives, which sit only on the general regime. Ask for the registry confirmation and its renewal date.
How do we actually get money to them, and in what currency?
Most Armenian contractors invoice in dollars or euros and are paid to an Armenian bank account. Local-rail transfers into Armenia are unreliable in practice, so payment usually goes by SWIFT, and some Armenian banks charge the contractor on withdrawal rather than charging you. Card transfer avoids that in most cases. It is worth agreeing up front who absorbs the fee, because otherwise it shows up as a request to raise the rate by the amount of the deduction. Or Kleos becomes the Contractor of Record. Flat $50 from you, zero from the contractor — so the withdrawal fee stops being a negotiation.
Could paying someone in Armenia make us taxable there?
Paying someone in Armenia does not on its own give you a taxable presence. What creates exposure is a person habitually concluding business on your behalf, or a fixed place of business you effectively control. It is a corporate tax question, separate from misclassification, and you can fix one and still have the other. Worth an hour with an Armenian adviser on your own facts.
What happens if a contractor is reclassified as an employee?
Not what most people expect. A contractor and an employee attract the same taxes and contributions in Armenia, so reclassification does not leave you with a tax shortfall to settle. It leaves you with a wage claim: liability for each month of unpaid wages, for annual leave that was never granted, and fines from the labour inspectorate for the breach of employee rights. Armenia has no at-will dismissal and no limitation period on wage claims, so ending the engagement does not close it. The total depends entirely on how long the arrangement ran, which is why the length of an engagement matters more here than the size of any single invoice.
Can we hire employees in Armenia, or use an Employer of Record?
Not directly — the employer has to be an Armenian entity or a registered Employer of Record. The cost is the unusual part: Armenia charges private-sector employers no social contribution at all. You withhold the employee’s income tax, pension, health insurance and stamp duty, and add nothing on top. Minimum wage is about $205 a month. There is no at-will dismissal, so budget two months’ notice and a month’s average salary for redundancy. Or Kleos becomes that Employer of Record — the legal employer in Armenia, with the contract, the payroll in dram and the contributions on our side.
General information only, not tax, legal or accounting advice. Figures reflect rules in force in 2026 and the assumptions stated beside each calculation. Armenia restructured its turnover tax on 1 January 2025: rates now differ by activity, a cost-based reduction applies subject to a statutory minimum, and several professional, consulting and labour-supply activities lost access to the regime, so an activity’s classifier group decides its tax. An entrepreneur on turnover tax also carries a fixed profit tax and social payment of AMD 5,000 a month each. The 1% high-tech rate needs annual entry in the state High-Tech Registry and expires 31 December 2031. Contribution rates, health insurance and the military stamp duty changed in December 2025. Armenia has no statutory test separating employment from a civil-law services relationship, so any score here is an indication, not a determination. Amounts are in US dollars, converted at 366 AMD/$ on 12 August 2026; check the current rate. Thresholds are set in dram: turnover tax and VAT at 115,000,000, micro-entrepreneurship at 24,000,000, the pension step at 6,000,000, health insurance at 2,400,001, the pension cap at 87,500 monthly on a base of 1,125,000, and the minimum wage at 75,000. Confirm your position at src.am or with a qualified Armenian adviser.