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Applicable Legal System and Legal Structure

The legal system in the Republic of Armenia (hereinafter referred to as the RA or “Armenia”) is civil law. The source of law is written codes, which consist of the Constitution, constitutional laws and other laws. Based on the laws, secondary legislation may also be adopted by the state authorities to ensure the implementation of the relevant laws. 

The judicial system in Armenia is a three-tier system comprising general and specialised courts. The Court of Cassation serves as the highest level in the judicial hierarchy. It:

• ensures the consistent application of laws and other normative legal acts; and
• eliminates fundamental violations of human rights and freedoms.

Courts of general jurisdiction encompass the courts of first instance and the Court of Appeal, which reviews cases on appeal from lower courts. Additionally, specialised administrative courts are responsible for adjudicating disputes arising from public administration and the actions of state authorities.

Separately, the Constitutional Court operates independently from the general judicial hierarchy and administers constitutional justice through reviewing the conformity of legal acts with the Constitution of the Republic of Armenia.

The regulatory structure includes several state authorities, each responsible for enforcing compliance with different legislative requirements. Specifically, the following regulatory bodies are the ones that businesses interact with most frequently:

• the State Revenue Commission (SRC) – responsible for tax and customs administration and enforcement of fiscal legislation;
• the Competition and Consumer Protection Commission (CCPC) – oversees fair competition, safeguards consumers’ interests and prevents monopolistic practices;
• the Public Services Regulatory Commission (PSRC) – the regulatory body overseeing public utilities, including energy, water supply and telecommunications; and
• the Central Bank of Armenia (CBA) – the primary financial regulator, which ensures the country’s financial stability, overseeing sectors including banking, lending, insurance and payment systems.

Generally, foreign direct investment (FDI) in Armenia does not necessitate any specific authorisation. The Law of the RA “On Foreign Investments” delineates the categories of foreign investments and stipulates that the legal framework applicable to foreign investors and their activities within Armenia shall not be less advantageous than that extending to citizens, enterprises and organisations of Armenia. Furthermore, a new draft Investment Law is anticipated to be enacted by the end of 2025. This draft proposes certain distinctions between the regulatory regimes for foreign and domestic investors, whilst ensuring equal legal protections and guarantees for both.

It should be noted, however, that certain sectors are subject to licensing requirements under Armenian legislation. These sectors include, for example, banking and finance, telecommunications, pharmaceuticals and healthcare. In some instances, prior approval from the relevant regulatory authority may be necessary for acquiring a participation or shareholding in companies operating within these licensed fields.

Therefore, FDI generally does not require review or approval by national authorities, except for investments in industries considered strategic or sensitive from the perspective of public health, financial stability or national security, among other things.

The Armenian government has stated that it maintains an open-door policy for FDI, especially for those coming from multinational companies. Additionally, three major legislative reforms are underway, particularly the overhaul of the Armenian Bankruptcy Code, the Armenian Company Law and the Law on Investments, with technical assistance provided by international development organisations. These reforms aim to streamline processes, protect creditors, shareholders and investors, and bring these three important legal frameworks up to the level of international best practices.

While there has been some discussion of introducing mandatory screening of FDIs in the Investment Law, as of the date of this note, no such policy decision has been formally adopted by the Armenian government. Even though the Armenian government officially states that it strives to ensure the protection of FDI from unlawful expropriation and other negative measures, there are some ongoing arbitrations against the government regarding various violations of bilateral investment treaties, the latest being the case involving the Electrical Networks of Armenia, where the government decided to appoint a public official as the administrator of the company. 

M&As in the traditional sense are less common in the Armenian market compared to straightforward share or asset acquisitions. When M&A transactions do occur, they usually take the form of consolidation mergers, forward mergers or reverse mergers, as allowed under the Civil Code and the Law on Limited Liability Companies and Law on Joint-Stock Companies. These structures can be used within corporate groups, for internal reorganisations or for third-party market acquisitions.

In practice, most acquisition transactions are structured as share or asset acquisitions. A share acquisition is generally the most efficient method for gaining control of a company because it allows the buyer to keep existing licences, agreements and staff without needing to re-register assets or reassign contractual relationships. On the other hand, an asset acquisition may be preferred when the investor wants to cherry-pick specific assets or business lines and avoid taking on historical liabilities, although this approach often involves additional tax and registration burdens.

Public M&A (mergers and acquisitions of listed entities) is infrequent due to the small number of listed entities on the Armenian Securities Exchange. When applicable, acquisitions of public companies are regulated by the Law on the Securities Market, which includes mandatory takeover, tender offer and disclosure requirements under the supervision of the CBA.

Minority investments are typically structured either as direct share acquisitions or, following recent amendments to the Civil Code, as convertible debt instruments that allow the investor to delay equity entry until specific milestones are achieved. In these cases, the shareholders’ agreement is crucial in defining rights such as access to information, veto powers, reserved matters, tag-along and drag-along rights, and exit strategies, since Armenian company law offers statutory protections for minority shareholders.

For foreign investors, a key consideration when entering an M&A transaction is structuring through a special purpose vehicle (SPV). Depending on the investment’s nature and the investor’s home jurisdiction, SPVs are often incorporated in other “friendly jurisdictions”, mainly to benefit from treaty protection and tax advantages. In regulated industries, such as financial institutions and utility services, prior approval from the relevant regulatory authority might be necessary before acquiring a controlling stake, as outlined in 6. Antitrust/Competition.

The regulatory approvals usually applicable to domestic M&A transactions are detailed in 6. Antitrust/Competition.

The most common entity types in Armenia are joint-stock companies and limited liability companies. Though the law envisages the possibility of establishing partnerships and other types of entities, those are uncommon in practice.

Both joint stock and limited liability companies limit the responsibility of their shareholders to the amount of their investments in the company. Joint-stock companies are classified as open and closed companies, with the open form mainly used to offer shares to the public.

Armenia’s corporate governance framework is built on a combination of laws, the corporate governance code, stock exchange rules and corporate constitutional documents. The main sources applicable to companies include the following.

• The company law regime (including, without limitation, incorporation, governance and winding up) is set out in the Civil Code, Law on Joint-Stock Companies and Law on Limited Liability Companies. For financial institutions registered and licensed by the CBA (banks, investment companies, credit institutions, insurance companies, investment fund managers, etc), the regime is supplemented by relevant entity-specific laws. The framework and procedure for winding up due to bankruptcy are set out in the Law on Bankruptcy (applicable to regular entities) and the Law on Bankruptcy of Banks, Credit Organizations, Investment Companies, Cryptoasset Service Providers, Investment Fund Managers, and Insurance Companies (applicable to financial institutions).
• The Law on Securities Market regulates financial services and securities activities. It imposes restrictions on the offering and promotion of securities and requires companies to prepare a prospectus when offering their shares to the public.
• The Corporate Governance Code, approved by the Minister of Economy, serves as a soft law code of practice, though in some instances companies are required to follow its provisions on a “comply or explain” basis. For instance, companies whose shares are listed on the main (A) or secondary (B) share lists, or whose bonds are traded on the main (Abond) or secondary (Bbond) bond lists, of the Armenia Stock Exchange (AMX) are required to comply with the Corporate Governance Code, along with additional disclosure and governance obligations set out in the secondary legislation of the CBA and the AMX Rules.
• Their constitutional documents regulate the internal management of companies, primarily the charter (by-laws). These documents, to the extent permitted by and consistent with applicable laws, define matters such as the rights attached to shares (including voting rights), the powers of directors, the conduct of shareholders’ and directors’ meetings, changes to share capital and procedures for share transfers. In the context of shareholder relations, shareholder agreements are used.

Minority investors are afforded certain fundamental protections, including the right to file a derivative claim against the company’s directors for breaches of fiduciary duty or trust, block resolutions requiring unanimous voting and call an extraordinary meeting of shareholders.

Shareholders of a joint-stock company are also entitled to:

• challenge unlawful resolutions of corporate bodies before the court;
• in the event of a squeeze-out, contest in court the price determined for their shares; and
• sell their shares to the majority shareholders.

UBO Disclosure

All companies are required to disclose their ultimate beneficial owners (UBOs) annually. The UBO register is public.

Significant Participation

Prior to the acquisition or alienation of a stake in a financial institution amounting to 10%, 20%, 50% or 75% of its charter capital (or whenever an existing stake reaches either of those thresholds), the pre-approval of the CBA should be sought.

There are no particular disclosure/reporting requirements for FDI. Please refer to 6. Antitrust/Competition for antitrust disclosure requirements.

Although Armenian laws provide comprehensive regulation for both equity and debt financing, debt financing continues to dominate the market. Within this segment, bank lending has traditionally been favoured over capital market offerings.

This trend largely stems from the small market size and the stronger capacities of commercial banks. However, some initiatives, including the acquisition of the AMX by the Warsaw Stock Exchange, its planned integration with European market infrastructures and the introduction of tax incentives for investors in listed securities, have been introduced to strengthen and expand capital markets.

The main law regulating the Armenian securities market is the Law on Securities Market, which covers relations arising in connection with activities on the securities market, including the public offering and trading of securities, provision of investment services (including the licensing of brokers, dealers, advisers and asset managers), clearing/custody/settlement systems and the regulation/supervision functions of the CBA.

The following applies under the Law on Securities Market.

• Issuers of securities admitted to trading or offered publicly (to more than 100 retail investors or an indefinite number of investors) have obligations in relation to the disclosure, publishing and registration of prospectuses, and ensuring equal treatment of investors. The Law sets out requirements for admission (“listing”) of securities to trading on a regulated market: issuers must produce a prospectus or trade prospectus; disclosures must be made. Conditions for suspension or termination of trading are also specified.
• Market rules must cover trading procedures, admission/suspension/termination of trading, submission of information, participant rights and obligations, ethics, etc. These requirements are further elaborated in the AMX Rules.
• The operator (AMX) must also provide public access to trading information (prices, volumes, transactions) and ensure equal access to information among participants.
• The Law prohibits market abuse, including insider dealing and price manipulation.
• A foreign investor would not be subject to disclosure requirements as a result of FDI in Armenia.

A foreign investor operating as an investment fund is not subject to any additional regulatory scrutiny.

Armenia maintains a merger control regime through the concept of “declaration of concentration” under its competition protection legislation, administered by the CCPC.

The concentration arises in several cases, including:

• the acquisition of more than 20% of the shares or assets of a company;
• the establishment of a new entity by two or more companies;
• the acquisition of intellectual property (IP) rights conferring market influence;
• transactions involving at least one undertaking holding a dominant market position; and
• mergers, etc.

Concentrations are subject to prior notification and approval by the CCPC where the combined net assets or turnover of the parties exceed the thresholds defined by the CCPC in a separate resolution. Clearance must be obtained before completion of the transaction; otherwise, the transaction may be deemed null and void.

The parties are required to submit a written application to the CCPC, including detailed information on the parties, their financial indicators and the nature and purpose of the transaction. The CCPC assesses whether the proposed concentration may lead to the restriction, prevention or distortion of competition, or the creation or strengthening of a dominant position in the relevant market. Once the filing is complete, the CCPC typically issues its decision within three months. In certain cases, defined as “simplified processes”, the commission may provide the clearance within one month. 

Armenian competition law applies equally to domestic and foreign investors; no preferential exemptions exist for foreign-to-foreign transactions that have effects within Armenia.

Sector-Specific Regulatory Approvals

In addition to the foregoing, certain transactions in regulated sectors require separate approval from sectoral regulators.

• The CBA must approve mergers, acquisitions or changes of control involving banks, credit organisations, insurance companies, investment companies and other financial institutions under its supervision. CBA approval focuses primarily on the financial stability, integrity and transparency of ownership within the financial system.
• The PSRC exercises approval powers over mergers or acquisitions involving entities operating in energy, water, telecommunications and electronic communications. PSRC review ensures continuity of service provision, compliance with licensing conditions and protection of consumer interests.

Substantive Assessment

Under the RA Law on the Protection of Economic Competition and the Protection of Consumers’ Interests, Armenia applies a substantive merger control regime, designed to prevent transactions that may restrict or distort competition. The CCPC assesses whether a concentration would lead to the creation or strengthening of a dominant position, or otherwise have an adverse impact on market dynamics.

In practice, the review begins with the delimitation of the relevant product and geographic markets. A product market includes goods or services that are substitutable by consumers in terms of usage, characteristics and price. The geographic market encompasses the territory where competitive conditions are sufficiently uniform.

When assessing a transaction, the CCPC begins by identifying which goods or services, and which geographic area, are affected – in other words, defining the markets where the parties operate and compete. It looks at how easily consumers can switch between products or suppliers, how prices behave and what practical alternatives exist.

The CCPC further analyses how the deal would change the balance of competition in those markets. It reviews the size and influence of the parties involved, how much their activities overlap and whether the merger would significantly alter the competitive area. If the companies are direct competitors, the CCPC focuses on whether the merger would remove important competitive pressure between them. If they operate at different levels of the supply chain, or in neighbouring markets, the review looks at whether the transaction might make it harder for competitors to access essential inputs, customers or distribution channels. The regulator also considers whether the deal could make co-ordination among remaining competitors easier – for example by increasing market transparency or reducing the number of active players.

Where potential competition concerns are identified, the CCPC weighs them against possible benefits of the merger, such as efficiency gains, cost reductions, innovation or improved service quality. If these benefits are concrete and likely to be passed on to consumers, they may justify clearance despite the structural changes in the market. As defined in the previous section, in regulated industries, additional approvals are required (by the CBA and PSRC).

Ex Officio Review

Even where notification thresholds are not met, the CCPC may conduct an ex officio review if a transaction appears to distort competition.

The law does not provide for a dedicated article that explicitly allows the CCPC to impose structural or behavioural remedies (such as mandatory divestments) tied directly to the clearance of a concentration. The Commission may also issue warnings or advisory opinions to prompt voluntary changes before formal enforcement is needed.

Where there is a risk of serious and immediate harm to competition, the CCPC can impose interim measures – for example ordering the temporary suspension of certain actions until the review is complete. In more serious cases, if a transaction fundamentally breaches competition rules, the Commission may seek court-ordered structural remedies, such as the reorganisation or invalidation of the offending transaction. Overall, remedies in Armenia are applied on a case-by-case basis.

In regulated sectors, additional oversight applies. The CBA may impose its own conditions or restrictions when approving mergers or acquisitions involving financial companies, focusing on financial stability, ownership transparency and risk management. Similarly, the PSRC can attach licence-related conditions to mergers in the utility sectors, ensuring uninterrupted service and compliance with regulatory obligations.

Please refer to 6.1 Applicable Regulator and Process Overview and 6.3 Remedies and Commitments.

Armenia does not currently operate a formal foreign investment or national security review regime. There is no centralised screening authority that assesses FDI based on origin, investor background or strategic sector risk. The main governing act is, as mentioned in 1. Legal System and Regulatory Framework, the law on Foreign Investments, which guarantees that the legal regime applicable to foreign investors cannot be less favourable than that afforded to local investors. It also provides protection against unlawful expropriation and ensures free repatriation of profits and proceeds. As a rule, FDI does not require prior authorisation or clearance.

Certain sector-specific regimes impose licensing or approval requirements where foreign ownership may have implications for public interest, national security or public health (please refer to 6. Antitrust/Competition for more details).

There is no applicable information in this jurisdiction.

There is no applicable information in this jurisdiction.

There is no applicable information in this jurisdiction.

As mentioned earlier, the legal framework for FDI in Armenia is generally the same as that for domestic enterprises. However, beyond the general laws outlined in the foregoing, some specific laws and regulations that may be particularly important when making an investment in Armenia should be highlighted.

Exchange Regulations and Sanctions

Armenia maintains an overall liberal foreign exchange environment regulated by the Law on Currency Regulation and Control and the implementing rules established by the CBA. Generally, foreign investors are permitted to open foreign currency accounts, convert freely between the Armenian dram and other currencies, and transfer funds abroad for legitimate purposes.

According to the Armenian law on Foreign Investments, foreign investors may make investments in the territory of Armenia:

• in foreign currency and the national currency of Armenia;
• in movable and immovable property (buildings, structures, equipment and other tangible assets) and any property rights related thereto;
• in shares, bonds and other securities defined by the legislation of Armenia;
• in the form of monetary claims, and with the right to demand the performance of obligations having a contractual value;
• in any IP right having a value;
• with the right to carry out economic activities provided for by Armenian legislation or by a contract, including the right to explore, extract develop or exploit natural resources;
• in paid services; and
• in any investments not prohibited by Armenian legislation.

However, banks and other financial institutions must comply with the KYC and AML obligations under the RA Law on Combating Money Laundering and Terrorism Financing.

Sanctions

Currently, Armenia does not maintain its own independent sanctions lists. Nevertheless, Armenian financial institutions adhere to internationally recognised sanctions regimes, including those established by the United Nations, the European Union, and the U.S. OFAC.

Real Estate

In addition to financial transfers, real estate acquisition and land use represent another key aspect of foreign investment activity regulated under Armenian law.

Normally, foreign legal entities and individuals may own buildings (premises). However, the ownership of land by foreign entities and individuals is partially restricted. In particular, non-citizens and foreign-registered entities may directly acquire title only to land plots for the purposes of homesteading and gardening, as well as for the construction and maintenance of individual residential houses, public and industrial facilities, and multi-apartment residential buildings. Nevertheless, such foreign legal entities or citizens may lease the restricted types of land plots or hold them indirectly through an Armenian-registered subsidiary in which the foreign investor holds shares.

Additional limitations apply to the alienation of land plots mentioned under Article 60 of the RA Land Code, among which it is worth mentioning objects of historical and cultural value, state nature reserves, state-owned forests, etc. Moreover, all real estate transfer transactions must be notarised and registered with the State Cadastre Committee, which finally issues a certificate confirming legal title.

For investment projects involving construction or land development, foreign investors must also comply with urban planning and zoning regulations under the Law on Urban Development and, where applicable, obtain construction permits from municipal authorities. Projects likely to impact the environment or cultural heritage may be subject to environmental impact assessment and heritage protection clearance as well.

Beyond general property ownership rules, foreign investors engaging in regulated industries must also consider sector-specific requirements imposed by competent authorities.

Other BMEs

Armenia’s investment regime is generally open; however, certain barriers to market entry (BME) are established by state authorities and independent regulators for several strategic or regulated sectors reflecting national security, public interest or prudential considerations. Such BMEs may include licensing, registration or the various assessment requirements imposed by competent authorities. Key areas include the following.

• Financial and banking sector: Foreign participation in Armenian banks is fully permitted but subject to approval by the CBA, as detailed in the foregoing.
• Audiovisual media: This sector also operates under a licence-based regime, as the entities carrying out activity in this sphere must be licensed by the PSRC. Additionally, according to the Law on Audiovisual Media, at the time of the establishment (creation) of broadcasters or thereafter, the share of foreign capital participation shall not be equal to or exceed 50% of the shares necessary for the decision-making of the given organisation, unless otherwise provided for by an international treaty.
• Electronic communication: This sector also requires licensing by the PSRC. Under the Law on Electronic Communication, any person may own and operate a public electronic communications network or provide related services upon obtaining the required licence from the PSRC. Moreover, the PSRC may not deny a licence or permit to an applicant who meets all statutory requirements solely because it is wholly or partially foreign-owned.
• Energy: The PSRC is responsible for licensing activities within the energy sector. While it does not directly regulate the composition of shareholders in licensed entities, the Law on Energy requires that any transfer of 25% or more of the shares (or any interest granting decisive influence over the licensee’s decisions, irrespective of its quantity) in the charter capital of a person holding a licence to generate electric energy in a power plant with an installed capacity of 30 MW or more must receive the PSRC’s prior consent.
• Mining and natural resources: When investing in this sphere, it is vital to take into consideration that Armenia’s subsoil resources are exclusively state property, and private entities can only obtain usage rights, not ownership. These rights are granted through permits, agreements or mining allotment acts. Foreign investors enjoy the same legal treatment and protections as domestic entities, with no requirement to engage in a mandatory local partnership.

In conclusion, Armenia’s regulatory system balances openness to foreign investment with targeted oversight in sectors of strategic significance. While foreign investors are afforded equal treatment and full legal protection, compliance with licensing and disclosure requirements remains a key condition for successful market entry.

Armenia’s taxation framework for companies is structured around a corporate income tax (CIT) model, supplemented by a value-added tax (VAT) system, simplified regimes for small businesses and micro-entrepreneurs, and withholding rules applicable to foreign companies earning Armenian-source income.

CIT

The core tax imposed on companies operating in Armenia is CIT, which is levied at a flat rate of 18% on taxable profits. Armenian tax residency plays a central role in defining the scope of taxation. Resident companies are taxed on their worldwide income, whereas non-resident companies are taxed only on income sourced from Armenia. Tax residence is typically tied to the place of incorporation or to the presence of a permanent establishment within the jurisdiction. For resident companies, taxable income is computed by deducting allowable expenses from gross income, while non-resident companies that operate through a permanent establishment are taxed on the income attributable to that establishment.

Foreign companies that do not operate through a permanent establishment may still be subject to Armenian tax through withholding obligations imposed on specific types of Armenian-source payments.

VAT

Armenia also applies VAT, functioning as the main consumption tax alongside the CIT system. The standard VAT rate is set at 20% and applies to most goods and services supplied within Armenia. VAT is also levied on imports. Certain categories of transactions, particularly exports of goods and related services, are zero-rated, which aligns with international VAT principles. Armenia also maintains a VAT registration threshold, whereby companies are required to register once their annual turnover exceeds AMD 115 million (about USD300,000), unless they voluntarily opt in earlier for commercial or compliance reasons.

Turnover Tax Regime

In addition to the standard corporate tax system, Armenia offers alternative simplified taxation regimes that may be attractive for small and medium-sized businesses or companies engaged in specific types of activities. One of the most prominent simplified systems is the turnover tax regime, which replaces both CIT and VAT for qualifying businesses. Under this system, companies pay tax based on gross revenue rather than net profit, and rates vary significantly depending on the nature of the business activity. For example, rates may range from as low as 1.5% to as high as 25% of turnover, depending on the sector and the type of income generated. This regime is particularly useful for businesses seeking simplified compliance obligations, though eligibility requirements and exclusions apply.

Micro-Enterprise Regime

The micro-enterprise regime grants highly favourable tax treatment to very small entrepreneurs whose annual turnover does not exceed AMD24 million (about USD62,000). Businesses under this regime may be exempt from both CIT and VAT, significantly reducing their administrative and financial burdens.

Dividends and interest paid by Armenian companies to non-resident/foreign investors are subject to withholding tax (WHT), and the following tax rates are applicable:

• interests, royalties, income from the lease of property and capital gains (except capital gains from the sale of securities) are subject to 10% WHT;
• dividends paid to non-residents shareholders are subject to 5% WHT; and
• other types of income (from services) received from Armenian sources is subject to 20% WHT.

The RA has signed double taxation avoidance agreements (DTAAs) with 47 countries. Many treaties reduce Armenia’s 10% withholding on interest to 5%, or in a few cases to 0%. In many treaties, royalties are capped at 5%, though again it depends on the country.

Reduced WHT rates under Armenia’s double tax treaties are generally available only when two fundamental conditions are satisfied. First, the income recipient must qualify as the beneficial owner of the dividends or interest, meaning the foreign investor must be the genuine owner of the income rather than acting through an intermediary entity. Second, the foreign investor must present a valid tax residency certificate issued by the competent authority in its home jurisdiction. This documentation is required to confirm treaty eligibility and to permit application of the reduced rates.

Acquisition Structures that “Step Up” the Depreciable Asset Basis

The main tax differences between asset acquisition and share acquisition are that asset acquisitions are subject to 20% VAT, whereas share acquisitions are not. Additionally, in a share acquisition, the company’s existing tax regime remains unchanged, while in an asset acquisition, the tax treatment of the acquired assets may change.

Earnings Stripping With Intercompany Debt

This method can be useful in certain cases, as interest paid on debt is generally deductible for CIT purposes. However, Armenian legislation imposes specific limitations, and there are circumstances in which interest payments may not be deductible.

Cross-Licensing or Similar Arrangements

An Armenian operating entity pays a royalty fee to a foreign IP owner for the right to use the intangible asset. This royalty payment is considered a deductible expense for the Armenian company.

Use of Net Operating Losses To Offset Future Income

Armenian tax legislation allows taxpayers to deduct tax losses from their gross income over the five tax years following the year in which the losses were incurred, subject to certain limitations and specific rules.

Capital gains paid by Armenian companies to non-resident or foreign investors are generally subject to WHT. Specifically, capital gains – excluding gains from the sale of securities – are subject to a 10% WHT rate, while capital gains from the sale of securities are exempt and subject to a 0% WHT rate.

In general, income is considered to be sourced from Armenia if, for example, it arises from the sale of shares in Armenian companies or from the sale of movable property located in Armenia.

As noted in the foregoing, Armenia has entered into DTAAs with various countries. These agreements may reduce the WHT on certain types of income, including capital gains, or exempt such income from taxation at the source altogether. Foreign investors using a “blocker” corporation can potentially reduce WHTs on dividends, interest, royalties and capital gains through applicable DTAAs.

Armenian tax legislation does not impose specific anti-avoidance rules on certain types of FDI or cross-border transactions. However, transactions between foreign investors and Armenian resident companies are subject to the country’s transfer pricing regulations, which came into effect on 1 January 2020.

These transfer pricing rules apply to taxpayers whose total value of controlled transactions exceeds AMD200 million (about USD520,000) in any reporting year. For the purposes of these regulations, a transaction is considered controlled if it involves the supply of goods, disposal of intangible assets, granting or receiving rights to use intangible assets, provision or receipt of loans, assignment or transfer of monetary claims, disposal or acquisition of financial assets, performance of works and/or the provision of services, provided that the transaction is conducted between residents and non-resident parties that are classified as related (interconnected) under the transfer pricing rules.

The regulations require that transactions between related resident and non-resident parties be priced using the arm’s length principle. Any deviations from this principle must be properly documented and reported to the Armenian tax service.

The legal and regulatory regime for employment in Armenia is primarily governed by the Armenian Labor Code (the code). The code is generally protective of employee rights and establishes the fundamental framework for all employment relationships. Key regulations include the mandatory requirement for written employment contracts, rules on working hours, overtime compensation, minimum wage and statutory benefits.

For a foreign investor, certain critical regulations applicable under Armenia’s employment landscape should be highlighted. All employment relationships must be formalised through mandatory written contracts that comply with the code, and the companies must follow the established application process to secure work permits for any foreign nationals they wish to hire. Perhaps the most significant aspect for an employer is that employment relations termination is strictly regulated; an employer cannot dismiss an employee without a specific legal basis defined in the Labor Code, a process that demands careful documentation and procedural adherence.

Furthermore, during transactions such as an acquisition, existing collective agreements are legally protected and must be honoured, a factor that can theoretically impact post-merger integration plans.

In Armenia, employee compensation is built on a foundation of direct non-cash payments, as outlined by the Labor Code. The total salary an employee receives may consist of a fixed base salary for fulfilling their core job responsibilities and additional remuneration for extra work, overtime work or work performed under special conditions, or as a motivational instrument at the discretion of the employer. This secondary component includes variable payments such as performance bonuses, supplements or other incentives, which are determined by law, employment agreements or internal company policies.

Beyond this standard structure, Armenian law allows joint-stock companies to offer equity-based compensation (employee stock options). These companies have the option to create employee share ownership programmes, where they can grant the staff company shares or related financial instruments. This provides a powerful tool for aligning employee interests with long-term company success.

Employers are also required to make regular contributions to the state social security system, which funds employees’ future retirement pensions.

Under Armenian law, an acquisition or change of control does not automatically alter existing employment relationships. Employees continue their roles with the same legal entity, and their contractual rights and benefits remain unchanged. Consequently, a change in ownership alone does not trigger any statutory right to severance pay or a notice period.

However, employment can be impacted if the transaction leads to a corporate reorganisation that involves a reduction in staff or positions. In such cases, the employer is legally required to provide employees with at least two months’ written notice and must pay severance equivalent to one month’s average salary upon termination.

While Armenia does not mandate works councils or specific collective bargaining procedures to complete an acquisition, existing collective agreements are protected. A single collective agreement remains valid through its term or until a new one is negotiated. If a reorganisation merges entities with multiple agreements, those are terminated. A new, consolidated agreement must then be established within two months, ensuring its terms are no less favourable than the previous ones.

While there is no law that makes FDI approval directly dependent on IP considerations, the RA Law on Foreign Investments highlights the importance of protecting intellectual and industrial property for foreign investors.

In practice, the Ministry of Economy works with the Intellectual Property Agency (IPA) to determine if a proposed investment involves technology transfer, innovation or proprietary rights that need to be registered or licensed in Armenia. This is especially important in areas like information technology, creative industries and engineering, where the investment’s value often relies on patent rights or software protection.

Armenia’s IP framework is harmonised with international obligations under the World Trade Organization’s Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement, World Intellectual Property Organization (WIPO) treaties and the EU–Armenia Comprehensive and Enhanced Partnership Agreement (CEPA). IP review does not operate as a “screening filter” in itself, but due diligence is conducted to ensure compliance with competition, data security and export control laws when foreign investment involves high-value intangible assets.

Armenia is generally considered to provide strong statutory protection for IP rights. The basic legal framework includes the Civil Code (Chapters 62, 63 and 65) governing copyright and industrial property, the RA Law on Copyright and Related Rights (2006, as amended) and the RA Law on Patents (2010). The protection of these rights is ensured through RA courts as well as mediation, if the parties mutually agree.

Armenia’s IP protection regime covers patents, utility models, industrial designs, trade marks, geographical indications, etc. However, enforcement challenges include limited judicial specialisation and, sometimes, delays in registration.

While AI-generated works are not explicitly recognised under Armenian copyright law, current legal interpretation limits authorship to natural persons, consistent with civil law traditions.

Armenia’s data protection framework is established by the RA Law on Personal Data Protection (2015), which is regulated by the Personal Data Protection Agency under the Ministry of Justice. This law sets forth comprehensive requirements for the collection, storage, processing and transfer of personal data, and reflects some principles found in the EU General Data Protection Regulation (GDPR).

The law applies to all data processing conducted in Armenia, and foreign entities that collect or process data concerning Armenian citizens may also be subject to its provisions.

Violations of data protection regulations may result in administrative fines under the Code of Administrative Offences. Enforcement has been moderate so far; however, the Agency has increasing discretion in imposing penalties, and the trend is moving towards stricter compliance and transparency obligations, especially for entities engaging in cross-border data flows.

Overall, Armenia provides a reasonably strong legal environment for IP and data protection, with ongoing reforms aimed at aligning with European best practices. For foreign investors, the protection of IP assets and compliance with data privacy obligations are key to ensuring both legal security and reputational integrity in Armenia’s evolving digital economy.