Knowledge base / Taxes
Payroll taxes in Armenia: what to withhold and how to work out net pay
Who can hire
Both an LLC and a sole proprietor (IE) can hire staff. Either way, the employer acts as a tax agent: it calculates the taxes, withholds them from pay and sends them to the budget. The rates are the same, and the business's own tax regime makes little difference.
Register each employment contract with the tax authority before the person starts work — at the latest by the end of the previous business day. Someone working before registration counts as an undeclared employee, and that means fines.
What comes out of the salary
- Income tax — 20%
Charged on the full gross amount. The pension contribution and stamp duty do not reduce the base. - Funded pension contribution
For employees born on or after 1 January 1974. 5% on salaries up to AMD 500,000. Above that, 10% minus AMD 25,000, capped at AMD 87,500 a month. - Stamp duty
AMD 1,000 a month on salaries up to AMD 1,000,000, and AMD 15,000 above that. - Health insurance contribution
New in 2026, for Armenian citizens on an employment contract earning over AMD 200,000. AMD 4,800 a month up to AMD 500,000, and AMD 10,800 above it.
For foreign employees, the pension and health insurance rules depend on their status in Armenia. Check each person before the first payroll run.
Example: AMD 400,000 gross
- Employee: Armenian citizen born in 1990.
- Income tax 20% — AMD 80,000.
- Pension contribution 5% — AMD 20,000.
- Stamp duty — AMD 1,000.
- Health insurance — AMD 4,800.
- Net pay — AMD 294,200. Employer cost stays at AMD 400,000.
If you agreed on a net figure, work back to the gross and put the gross amount in the contract. Otherwise any rate change forces you to renegotiate pay.
Reports and deadlines
- A monthly per-employee report on income tax and social payments, filed through the tax authority's electronic system by the 20th of the following month.
- Payment of the withheld amounts by the same date.
- Hires, contract changes and terminations are registered in the same system as they happen.
See all monthly dates in our tax reporting calendar for Armenia. Still choosing a structure for hiring? Read sole proprietor or LLC in Armenia.
Contractors instead of employees
If you pay an individual under a services contract, the company usually still withholds 20% as a tax agent. If the contractor is a registered sole proprietor, they handle their own taxes. Putting someone with fixed hours and a manager on a contractor agreement is risky: the tax authority can treat it as employment.
Common mistakes
- Agreeing on net pay and forgetting that pension and health insurance come out of the gross.
- Registering the contract after the first working day instead of before it.
- Skipping the pension contribution for an employee born in 1974 or later, or withholding it where it does not apply.
- Missing a monthly report and paying penalties.
The health insurance rules are still being refined. Check the current amounts before you run payroll.
Frequently asked questions
What taxes are withheld from salaries in Armenia?
The employer withholds 20% income tax, a funded pension contribution, a stamp duty and, from 2026, a health insurance contribution for some employees. All of it comes out of gross pay, with no extra employer contributions on top.
How do I calculate net pay from a gross salary of AMD 400,000 in Armenia?
For an Armenian citizen born in 1990: AMD 80,000 income tax, AMD 20,000 pension, AMD 1,000 stamp duty and AMD 4,800 health insurance leave net pay of AMD 294,200. Employer cost stays at AMD 400,000.
When must I register an employment contract with the Armenian tax authority?
Before the person starts work, at the latest by the end of the previous business day. Someone working before registration counts as an undeclared employee, which means fines.
Do I withhold tax when paying a contractor in Armenia?
If you pay an individual under a services contract, the company usually still withholds 20%. A registered sole proprietor handles their own taxes. Treating someone with fixed hours and a manager as a contractor is risky.
Hiring your first employee?
We draft the contract, register it with the tax authority, run payroll and file the monthly reports on time.
Sources: PwC — pension, stamp duty, health insurance; hartak.am — income tax and payment deadlines; hartak.am — registering employees; Tax Code and Labour Code — arlis.am; State Revenue Committee — src.am.