How does Armenia payroll tax work in 2026?
Armenia is one of the few countries where the employer pays 0% in social charges on the payroll. The full funded-pension cost sits with the employee at 5%. Income tax is a flat 20% from the first dram, with no personal allowance. That combination makes Armenia unusually cheap to employ from an employer-cost perspective.
· Armenia guide
Illustration · Yerevan, Armenia
Armenia employers pay 0% in social charges on payroll. There is no employer contribution to the funded pension scheme.
Employees contribute 5% of their gross salary to the funded pension. This applies to income up to AMD 500,000 per month. Above that threshold a different formula applies.
Income tax is a flat 20% on all employment income. There is no personal allowance or zero-rate band. Payroll is filed monthly and the return is due by the 20th of the following month.
What does an employer pay in Armenia payroll taxes?
The employer social charge rate is 0%. Armenia does not require employers in the private sector to make separate social security contributions on top of gross salary.
The funded pension scheme is entirely employee-funded. This is one of the most employer-friendly payroll cost structures in the region.
| Charge | Rate | Who pays |
|---|---|---|
| Social security / payroll tax | 0% | Employer |
| Funded pension contribution | 5% (standard band) | Employee only |
| Income tax withholding | 20% flat | Withheld by employer, borne by employee |
The employer is the withholding agent for both income tax and the employee pension contribution. These amounts are deducted from gross salary and remitted to the State Revenue Committee of Armenia by the 20th of the following month.
Because the employer social charge is 0%, the total employer cost of hiring in Armenia is essentially gross salary plus the Teamed service fee. There are no hidden employer-side levies layered on top.
Employers must withhold income tax at 20% and the employee funded-pension contribution on every payroll run. The monthly payroll tax return and payment are both due by the 20th of the month following the pay period.
Source: Vardanyan and Partners: Payroll Tax Rates and Social Security Contributions in Armenia
What does an employee pay in Armenia social contributions?
The employee pays 5% of gross salary into the funded pension scheme. This applies to monthly income up to AMD 500,000.
Above AMD 500,000 per month, a higher formula applies. The contribution is capped. No separate sickness or unemployment insurance contribution is deducted from employee pay.
| Monthly income band | Employee contribution |
|---|---|
| Up to AMD 500,000 | 5% of gross salary |
| Above AMD 500,000 | Higher formula applies (10% minus AMD 25,000), capped at AMD 1,125,000 per month |
The funded pension scheme became mandatory in Armenia from 2014 for employees born after 1974. Contributions go into an individual savings account and are managed by a licensed pension fund manager. The employee chooses the fund; the employer deducts the contribution and remits it on their behalf.
The minimum wage in Armenia is AMD 75,000/month. An employee earning the minimum wage pays 5% of that amount into their pension, and 20% of the same amount as income tax.
Armenia income tax bands for 2026
Armenia uses a flat income tax rate of 20% on all employment income. There is only one band.
There is no personal allowance. The 20% rate applies from the first dram of earnings. Residents and non-residents are taxed at the same rate on Armenian-source employment income.
| Income band | Rate |
|---|---|
| All employment income (from AMD 0) | 20% flat |
The flat rate structure means there is no bracket arithmetic to manage. Every dram of employment income is taxed at 20%. The employer withholds income tax on each payroll run and remits it directly to the State Revenue Committee.
Because there is no tax-free threshold, a bonus payment is taxed identically to regular salary. There is no bunching effect or marginal rate cliff to plan around, unlike countries with tapered allowances.
Non-resident employees
Non-residents working in Armenia on Armenian-source employment income are subject to the same 20% flat rate. Tax treaty relief may reduce or eliminate this for residents of countries with a double taxation agreement with Armenia. The employer is responsible for applying the correct withholding rate.
How does Armenia payroll filing work?
Armenia uses a monthly payroll cycle. Employers must submit the payroll tax return and pay all withheld taxes by the 20th of the month following the pay period.
The return covers income tax withheld and the employee pension contribution. Both the return and the payment are due on the same deadline.
The payroll filing sequence in Armenia:
- Run payroll for the calendar month
- Calculate gross pay, deduct 20% income tax and the employee pension contribution
- Submit the monthly payroll tax return to the State Revenue Committee by the 20th of the following month
- Remit all withheld income tax and pension contributions by the same 20th deadline
Armenia runs 12 pay periods per year. The statutory cycle is monthly. There is no concept of real-time payroll submission on each payday; the obligation is a single monthly return and payment.
The filing body is the State Revenue Committee. All employer withholding obligations flow through one agency, which simplifies compliance compared to multi-authority systems in other countries.
-
Collect pay data
Gather salary and any additional payments for the calendar month before the payroll run closes.
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Calculate gross pay
Total all earnings for the month, including regular salary, bonuses, and any taxable benefits.
-
Deduct employee pension contribution
Apply the employee funded-pension rate to gross salary. The standard rate applies to monthly earnings in the lower band; the alternative formula applies above that threshold.
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Deduct employee income tax
Apply the flat income tax rate to gross salary. There is no personal allowance, so the rate applies from the first dram.
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Submit the monthly payroll return
File the payroll tax return with the State Revenue Committee by the deadline. The return covers income tax withheld and the employee pension contribution.
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Remit withheld taxes and contributions
Pay all withheld income tax and pension contributions to the State Revenue Committee by the same monthly deadline.
Pension contributions in the Armenia payroll stack
The employer contributes 0% to pension. The employee contributes 5% of gross salary (on income up to AMD 500,000 per month).
The entire pension cost sits with the employee. Enrollment in the funded pension scheme is mandatory for employees born after 1974.
Armenia's pension system is a funded individual-account model. Each employee has a personal pension account with a licensed fund manager. There is no employer-side contribution to match.
Key features of the scheme:
- Mandatory for employees born after 1 January 1974
- Voluntary for employees born before 1974
- Contribution rate: 5% on monthly earnings up to AMD 500,000
- Above AMD 500,000 per month: formula shifts to 10% minus AMD 25,000, capped at AMD 1,125,000 per month contribution
- State co-financing was available for voluntary participants but the terms vary
The employer's role is withholding and remitting the employee's contribution. The employer does not set a contribution rate, does not match the contribution, and carries no additional cost.
This makes Armenia pension administration straightforward for employers: there is one rate for most employees, it comes from the employee's gross pay, and it is paid to the State Revenue Committee alongside the income tax withholding by the 20th of the month.
How does Teamed handle Armenia payroll for you?
Teamed becomes your legal employer of record in Armenia for from $599 per employee per month, with zero FX mark-up in any currency.
Payroll, tax, and the full Armenia employment law stack run on one platform.
Real HR and legal experts handle your Armenia hires, from the first offer letter through every monthly return to the State Revenue Committee. An actual person, not a chatbot or a pooled queue. There is no setup fee and no exit fee. Employer cost passes through at cost, itemised on every invoice.
Because employer social charges in Armenia are 0%, the cost calculation is simpler than most markets. EOR payroll, contractor onboarding, and entity setup all live on one platform. An Armenia contractor who converts to payroll keeps their record. That same employee can graduate from EOR to your own Armenia entity without switching systems. Run the Employer Cost Calculator to see the full picture. EOR is the right model for a first Armenia hire, until it isn’t. Start from the Armenia hiring overview.
Key sources: Vardanyan and Partners: Payroll Tax Rates and Social Security Contributions in Armenia, PwC Worldwide Tax Summaries: Armenia.
Frequently asked questions
What is the employer social charge rate in Armenia in 2026?
The employer social charge rate in Armenia is 0%. Private-sector employers do not make contributions to the funded pension scheme. The only payroll obligations for the employer are withholding income tax at 20% and the employee's pension contribution, then remitting both to the State Revenue Committee.
What pension contribution does an employee pay in Armenia?
Employees born after 1 January 1974 pay 5% of gross salary into the funded pension scheme on monthly earnings up to AMD 500,000. Above that threshold a different formula applies. The employer deducts this from gross pay and remits it on the employee's behalf. The employer does not contribute any matching amount.
How is income tax calculated on an Armenia payroll?
Income tax in Armenia is a flat 20% on all employment income. There is no personal allowance and no progressive bracket system. The rate applies from the first dram of earnings. The employer withholds this amount on each payroll run and remits it to the State Revenue Committee by the 20th of the following month.
When is the Armenia payroll return due?
The monthly payroll tax return and all remittances are due by the 20th of the month following the pay period. Armenia uses a monthly payroll cycle of 12 pay periods per year. Both the return and the payment go to the State Revenue Committee on the same deadline.
What is the minimum wage in Armenia in 2026?
The national minimum monthly wage in Armenia is AMD 75,000/month. This figure has been in force since 2023. A projected increase to AMD 85,000 discussed in earlier parliamentary debates was not enacted on schedule. Verify the current level with the State Revenue Committee before making an offer at minimum wage.
The most common question we get on Armenia is whether the zero employer social charge is real. It is. The private-sector employer owes nothing to the pension scheme beyond its withholding role. The simplicity is genuine. What surprises people is the flat income tax from dram one: there is no allowance to plan around, so every part of the package hits at the same rate.
Armenia's employer social charge is 0%. That is not a rounding error.
A flat 20% income tax, no personal allowance, and a monthly filing deadline on the 20th. Simple by design.
Structure the offer correctly. Run the numbers before you send it.
