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4.1. Domestic PE of a Foreign Entity

The domestic definition for a PE in Armenia is adapted from the definition for PE as per the Organization for Economic Co-operation and Development (OECD) Model Tax Convention, with variations thereon. Effective 1 January 2018, a permanent establishment is defined as a fixed place of business activities in Armenia recognized by the tax authorities, through which the enterprise wholly or partly carries on its business. It generally includes:

a) any place of production, processing, consolidation, re-packaging, packaging and/or supply of goods;

b) any place of management;

c) any place of geological investigation of the subsurface, exploration for and extraction of mineral resources (including preparatory works)  and/or performance of works, provision of supervision and/or monitoring services over exploration and/or extraction of mineral resources;

d) any place of conduct of the activity related to the installation, adaptation, and exploitation of gaming machines, computer networks and communication channels, amusement rides, as well as related to transport or other infrastructure;

e) place of sale of goods in the territory of the Republic of Armenia;

f) any place of performance of construction activities and/or construction and installation works, as well as of provision of supervision services over the performance of these works;

g) location of the representative office or the branch office, except for the representative office which exclusively performs preparatory and/or support activities;

h) location of an organisation or a natural person carrying out brokerage activities in the Republic of Armenia on behalf of a non-resident organisation or a natural person in accordance with the Law of the Republic of Armenia “On insurance and insurance activities”;

i) location of the reporting participant of the joint activity performed within the framework of the contract on joint activity concluded with a non-resident organisation or a non-resident natural person where this joint activity is carried out in the territory of the Republic of Armenia;

j) services provided by employees and/or personnel of the non-resident company in the territory of the Republic of Armenia for at least 183 calendar days in a tax year;

k) sale of goods at exhibitions and fairs organised by a non-resident in the territory of the Republic of Armenia for at least 30 days;

l) an agent (excluding an independent agent acting in the ordinary course of business) performing any function in Armenia on behalf of a non-resident.

However, preparatory and/or support activities carried out by a non-resident in Armenia are not considered as a PE if the said activities are carried out for a period of less than three years. For this purpose, preparatory and/or support activities include:

i) utilisation of any place exclusively for the storage and/or exhibition of the goods belonging to the non-resident organisation or the non-resident natural person;

ii) only purchase of goods at the permanent place of activity which does not involve their sale;

iii) only collection, processing and/or dissemination of information, advertisement or research of the market for goods, works and services at the permanent place of activity.

When a foreign enterprise is deemed to have PE in Armenia, income from its activities conducted through the PE will be subject to tax in Armenia.