Do I Need a Local Entity to Hire in Armenia?

In Armenia, a "local entity" refers to a recognized business presence, such as a subsidiary or branch office, that can legally employ workers. This setup is essential for managing payroll, tax obligations, and employment protections in the country. Without a local entity, your company cannot directly hire employees and fulfill local compliance requirements.

For those looking to hire in Armenia without the complexities of establishing a local entity, using an Employer of Record (EOR) is a viable alternative. An EOR acts as the legal employer, managing payroll and compliance while you focus on your business operations.

What is Required to Employ Someone in Armenia?

• Local employing entity required to directly employ? Yes (a local entity is necessary for direct employment)
• Payroll registration required? Yes (mandatory registration with the State Revenue Committee)
• Withholding/tax remittance required? Yes (employers must withhold income tax and social security contributions)
• Social contributions required? Yes (employers are required to contribute to social insurance)
• Local employment agreement required? Yes (employment contracts must comply with Armenian labor laws)
• Mandatory benefits to budget? Yes (statutory leave, health insurance, and pension contributions)
• Works council/collective agreements considerations? Usually (some sectors may be subject to collective agreements)

Best Options If You're Hiring in Armenia

Can I Hire Contractors Instead of Setting Up an Entity?

Yes, but you should be cautious about misclassification risks.

While hiring contractors in Armenia allows you to bypass the need for a local entity, it's essential to ensure that the contractor relationship is genuinely independent. Misclassification can lead to legal issues if the contractor is deemed to be functioning as an employee.

• Ensure the contractor has multiple clients and is not exclusively working for your company.
• Limit your control over their work hours and methods to maintain independence.
• Clearly outline the project scope and deliverables in the contract.

How Long Does Entity Setup Take And What Does It Cost?

Typical entity setup timeline: It often takes 4–8 weeks to set up an entity in Armenia, depending on the type of business and required registrations.

Ongoing cost categories (entity route):

• Accounting, bookkeeping, and statutory filings: Estimated 50,000–150,000 AMD per month ($130–$390)
• Payroll provider: Estimated 10,000–30,000 AMD per employee per month ($26–$78)
• Employer registrations and recurring compliance: Varies by complexity
• Corporate tax filings and annual reporting: Estimated 300,000–900,000 AMD per year ($780–$2,340)

EOR cost components (no-entity route):

• A per-employee EOR service fee (from $399 p/month with Playroll)
• Pass-through statutory costs (e.g., employer social security contributions)
• Any optional benefits you choose to provide beyond statutory minimums

How an Employer of Record Can Help You Hire in Armenia

Hiring in Armenia can be complex, but it doesn’t have to require setting up a local entity or taking on long-term overhead. With an Employer of Record like Playroll, you get a simple, predictable way to hire compliantly while keeping costs transparent and under control. We help you:

• Hire employees in Armenia quickly without establishing a local entity, eliminating incorporation costs, ongoing administration, and exit complexity.
• Stay fully compliant with local payroll, tax, and employment regulations with Playroll’s managed payroll services.
• Control your total employment costs, with a clear monthly EOR service fee (from $399 per employee).
• Focus on growing your business, while we manage contracts, payroll, compliance, and labor law obligations end to end.
• Scale up or exit the market easily, without the financial or legal burden of closing a local entity.