Real Estate Taxation in Bali for French Buyers: What You Need to Know Before Buying

Published on June 9, 2026 and written by Cyril Jarnias

Buying a villa in Bali is a dream for many French people. But behind the photos of infinity pools lies a less glamorous reality: a very specific legal framework for foreigners, and a tax system that involves both Indonesia and France. Without preparation, you could end up with an illegal arrangement, a 20% tax on rent… or a nasty surprise when you resell.

What French People Are Not Allowed to Buy in Bali

Even before talking about taxes, you need to understand a crucial point: in Indonesia, and therefore in Bali, a foreigner cannot be the full legal owner of the land, what local law calls Hak Milik.

Hak Milik is the strongest title provided by the Indonesian Agrarian Law (UUPA No. 5/1960). It is reserved exclusively for Indonesian citizens. Any attempt to put a foreigner on a Hak Milik certificate is legally void.

Today, this type of arrangement is doubly dangerous. On one hand, it has always been legally fragile (the nominee can sell, die, divorce…). On the other hand, the province of Bali has tightened its stance. A recent provincial regulation (Perda No. 4/2026):

– reaffirms the prohibition of nominee arrangements,

– provides for possible criminal penalties,

– also targets intermediaries who organize them.

In other words: continuing to buy “in Hak Milik via a Balinese friend” means investing in an asset with no real right under Indonesian law, with a growing risk of being challenged.

Legal Ways for a French Person to Access Real Estate

The ban on Hak Milik does not mean buying is impossible, but it must go through appropriate titles or structures. For a French person, three main frameworks are provided for by Indonesian law.

Leasehold (Hak Sewa): The Simplest and Most Common

Hak Sewa, often called “leasehold”, is the most used solution by foreigners in Bali, especially for villas in tourist areas (Canggu, Seminyak, Uluwatu, Ubud…). Legally, it is a right to rent/use land (and a villa) for a fixed period.

Main features:

– Open to any foreigner: no need for a company or long-term residence permit.

– Clear legal basis: the Indonesian Agrarian Law (UUPA, article 44) explicitly states that Hak Sewa can be held by non-citizens.

– Typical duration: 25 to 30 years for an initial term, often with renewal options. In practice, we see more and more 30 + 20 + 30 year schemes, up to 80 years of potential enjoyment, but split into successive contracts.

– Legal structure: the Indonesian owner retains the land title (Hak Milik or other); the foreigner holds a registered contract that gives them a transferable usage right (assignment of the remaining lease term).

– Entry cost: a capitalized rent (lease price) generally 30 to 50% lower than the price of equivalent freehold property.

– limit the initial investment,

– reduce acquisition tax costs (no BPHTB land transfer tax),

– stay within a clear legal framework without a company.

On the flip side, you have to factor in two realities: the residual value decreases as the remaining lease term shortens, and renewal is never automatic; it depends on the contract clauses and the goodwill of the landowner.

Hak Pakai (Right of Use): Quasi-Ownership for Residents

Hak Pakai is a real land title, registered in the cadastre, granting its holder exclusive usage rights over land and a building. For a foreigner, it is the form that comes closest to stable full ownership over time, provided several criteria are met.

Conditions and limits:

Title duration:

– On state land or state-managed land, the reference scheme is 30 years + 20 years + 30 years, i.e. 80 years potential.

– On an Indonesian’s Hak Milik land, a 30-year renewable scheme is common, sometimes up to 60 years total.

Major vigilance point: if the buyer loses their resident status (KITAS expiration, permanent departure, change of status), they generally have 12 months to transfer the Hak Pakai to an eligible person (Indonesian, other eligible foreigner) or convert it into a lease. Otherwise, the right can be canceled.

Hak Pakai is therefore particularly suitable:

– for the French person who wants to live part of the year in Bali with a residence permit,

– for those seeking enhanced legal security and a long duration,

– for high-end properties exceeding the value thresholds set for foreigners.

The Indonesian Company PT PMA: The Tool for Professional Investment

For larger projects (multiple villas, tourist complex, structured commercial operation), the solution often used is creating an Indonesian company with foreign capital, called PT PMA (Perseroan Terbatas Penanaman Modal Asing).

– a Hak Guna Bangunan (HGB) title, right to build on land,

– or sometimes a commercial Hak Pakai.

Main features:

– It is the company, not the individual, that holds the land right.

– HGB functions like economic freehold over a long, renewable term, perfectly suited for tourist rental activities.

– PT PMA is subject to corporate income tax, at a rate of around 22% on net profit.

– Setup costs are significant (stated capital around 10 billion rupiah, creation fees, notary fees, annual accounting obligations).

This structure offers several advantages for a French investor:

– It allows deducting expenses (salaries, maintenance, marketing, loan interest, depreciation) from taxable income, which is not possible as an individual with simple villa rental.

– It professionalizes the activity, which is appreciated by local authorities in a monitored tourism sector.

– It can facilitate international tax planning, by coordinating taxation in Indonesia and France under the bilateral tax treaty.

On the downside, you have to accept more formalities (local accounting, periodic returns, audits…) and recurring operating costs.

Acquisition Taxes: What a French Person Pays at Purchase

The entry tax depends heavily on the legal structure chosen. Simple leasehold or purchase via PT PMA are not treated the same way.

BPHTB: The Indonesian Tax on Acquisition of Land and Building

BPHTB (Bea Perolehan Hak atas Tanah dan Bangunan) is equivalent to a transfer duty on land and buildings. It applies to transfers of land titles (Hak Milik, HGB, Hak Pakai), but not to the mere signing of a lease.

Calculation principles:

– Base = the taxable value, defined as the higher of:

– the price stated in the deed,

– the official NJOP value set by the administration.

– A small local exemption (NPOPTKP, generally 60 to 80 million IDR in Balinese regencies) is deducted.

– Standard rate = 5% of this taxable base.

In practice, for land/building worth 1.2 billion rupiah with a 60 million exemption, BPHTB amounts to about 57 million rupiah.

Key points for a French person:

Very concrete consequence: buying through a PT PMA that takes an HGB or Hak Pakai triggers this 5% tax, while a simple lease is not subject to it.

VAT / PPN: When the Real Estate Value-Added Tax Applies

PPN (Pajak Pertambahan Nilai) is the Indonesian VAT. It does not apply to all real estate purchases, only those made from a taxable seller, typically a developer or a VAT-registered company.

Important parameters:

The Indonesian government regularly uses VAT as a stimulus tool. Temporary VAT schemes “borne by the state” (PPN‑DTP) are sometimes introduced for new homes under a certain price, which can significantly reduce the bill for the buyer. These measures vary over time, so it is essential to check, at the time of the project, whether a partial exemption is in effect for the intended category of property.

Taxes Specific to Leasehold Structures

In a Hak Sewa purchase, there is no transfer of land title, so no BPHTB. But the Indonesian tax authorities consider it income for the lessor, who must pay a final income tax (PPh) on the amount of the “lease price”.

This PPh on the lease assignment is in practice:

– around 10% of the lease value for a lessor with an Indonesian tax ID (NPWP),

– increased to 20% if the lessor does not have an NPWP.

Legally, the seller/lessor is the debtor of this tax. In the reality of the Balinese market, it is very common for the buyer to bear it, negotiated in the price or explicitly stated in the promise of sale.

Notary Fees (PPAT) and Ancillary Costs

Any transaction of a certain amount must go through a notary‑PPAT (public official responsible for land deeds). They secure the transaction, check titles, draft the deed (AJB for a title sale, lease contract for a leasehold), register the operation and declare the taxes.

Their fees generally range:

– between 1 and 1.5% of the sale price for real estate,

– sometimes with a flat fee for modest transactions.

To these fees are added administrative costs (registration at BPN, stamp duties, sworn translations…) which remain limited compared to the amounts involved.

We can summarize the main entry costs for a French person as follows:

These percentages are given as an indication: exact practices, cost sharing, and any temporary exemptions must be verified on a case-by-case basis.

Annual Holding Taxes in Bali

Once the villa is purchased, Indonesian taxation becomes lighter but continues: the annual property tax, and possibly other charges related to commercial operation.

The Indonesian Property Tax: PBB

PBB (Pajak Bumi dan Bangunan) is the local equivalent of our property tax. It applies to all properties, whether owned by an Indonesian or a company (including PT PMA).

Calculation principles:

Some figures for reference:

– A villa with an NJOP of 310 million rupiah has a PBB of about 310,000 IDR per year, around €20.

– For a villa estimated at around 300,000 USD, the annual PBB is generally in the range of 30 to 180 USD.

Other Possible Taxes

Two other taxes may appear:

– the construction tax (2 to 4% of the construction budget) for new builds or very large works,

– the PPnBM, luxury goods tax, which only applies to primary sales of properties above a very high price (around 30 billion rupiah). It has little impact on an average investor, but matters for the very high end.

Renting Out Your Villa: Indonesian Taxation of Rental Income

For many French people, the Bali villa is not just a second home: it is also a rental asset. As soon as income is generated in Indonesia, the local tax authorities claim their share.

Applicable Rates Depending on Owner Status

Indonesian taxation on rents operates mainly through withholding taxes proportional to turnover, without deduction of expenses for individuals.

Two main cases are distinguished:

1. Owner considered an Indonesian tax resident (stay of more than 183 days per year in Indonesia, or certain KITAS/KITAP holders):

– Tax on rents = 10% of the gross amount received.

– This tax is said to be “final”, there is no second calculation on a net result.

2. Owner who is not an Indonesian tax resident:

Income generated through a PT PMA company is treated differently: it is included in the taxable profit of the company, which bears corporate income tax (CIT) of around 22–25% on net profit, with the possibility of deducting operating expenses (salaries, maintenance, marketing, interest, depreciation…).

France-Indonesia Tax Treaty and Rental Income from Real Estate

The tax treaty signed between France and Indonesia around the turn of the 1980s follows a classic OECD principle: real estate income is taxable in the state where the property is located.

Concretely:

– Rents from a villa in Bali are taxable in Indonesia,

– Indonesia retains this exclusive right; the treaty does not aim to reduce this rate for this type of income,

– But, on the French side, the taxpayer must declare these worldwide incomes, with France taking into account the tax paid in Indonesia to avoid economic double taxation.

1. suffers a withholding in Indonesia (10 or 20% of gross, or CIT via a PT PMA), 2. declares these rents in France, 3. benefits from a tax credit or imputation mechanism to avoid being taxed twice on the same base.

How to Legally Reduce the 20% Indonesian Withholding Tax

The domestic rate of 20% on gross rents can be reduced to 10% under the treaty, but this is never automatic.

To benefit from the treaty rate, the French investor must:

– prove their tax residence in France via an official certificate issued by the French tax authorities,

– provide this certificate, translated and apostilled, to the Indonesian paying agent (villa manager, local platform, PT PMA…) making the withholding,

– have the relevant form from the Indonesian tax administration (DGT‑1) completed and submitted, now handled online.

Without these formalities, the full 20% rate will be applied, even if the treaty provides for a lower ceiling.

Reselling Your Villa: Indonesian Capital Gains Taxation

In Indonesia, the taxation of real estate disposals operates mainly through a proportional levy on the sale price, considered a final income tax.

Sale of a Land Title (Hak Milik, HGB, Hak Pakai)

When land or a building is transferred with a title transfer:

– the seller pays a final tax (PPh) equal in practice to 2.5% of the gross sale price or the NJOP value if higher,

– net income (actual gain) is not recalculated; this rate applies to the entire price.

At the same time, the buyer bears the BPHTB of 5% seen earlier. On a standard resale, the mechanics look like this:

For most transactions, a seller therefore receives about 92 to 93% of the gross price, after deducting PPh and real estate agent commission (often around 5%).

Resale of a Leasehold (Assignment of Lease)

When it is only an assignment of a leasehold right, the logic changes:

– the original lessor (Indonesian landowner) is again taxed on the value of the “lease sale”,

– a rate of 10% on the assignment price is often mentioned for a seller with an NPWP,

– without NPWP, the administration may claim 20%.

Inheritance Transfer: No Indonesian Tax, But Procedures

Good news for heirs: in Indonesia, the transfer upon death of real estate is not subject to a specific tax. Indonesian law:

– exempts from PPh transfers of rights on land and buildings resulting from inheritance,

– requires in return an exemption certificate issued by the tax authorities, upon formal request by the heirs.

In practice, a French heir of a Balinese villa will not pay any specific Indonesian tax at the time of transfer. But:

– they may have to pay certain taxes if the property is later resold,

– and above all, they must take into account French inheritance taxation (inheritance tax, territoriality rules, absence of a specific France-Indonesia treaty for inheritances).

What a French Person Must Declare in France for Their Bali Villa

For a French tax resident, the basic rule is simple: France taxes people residing there on all of their worldwide income and real estate assets, subject to international treaties.

Declaration of Rental Income from the Balinese Villa

Rents received in Bali, whether or not already taxed in Indonesia, must be declared in the annual French tax return.

– Income from unfurnished rental would be treated as property income.

– Income from furnished tourist rental is more like BIC (industrial and commercial profits). In practice, many Balinese structures resemble a para‑hotel activity.

The France-Indonesia tax treaty leaves the primary right to tax these real estate incomes to Indonesia. France, for its part:

– takes these rents into account to determine the average tax rate (effective rate effect),

– or applies a tax credit / imputation mechanism, so that there is no economic double taxation.

Inclusion in the IFI: The French Wealth Tax on Real Estate

If a household’s net real estate assets exceed €1.3 million, the Bali villa is included in the IFI tax base, even if located outside France.

Principles:

– A French tax resident must include all their real estate assets, whether located in France or abroad.

– The Bali villa must be valued at its market value as of January 1 of the year, minus related debts (loans, etc.).

– The IFI rate schedule is progressive, from 0.5% to 1.5% on tranches above €800,000, with actual triggering at €1.3M.

For a non‑resident French person, only property located in France is subject to IFI. But once they are a resident, the Balinese villa is fully visible to the tax authorities, whether held directly, through an Indonesian company, or via a more elaborate structure.

French Capital Gains Tax on Resale: Coordination with Indonesian Taxation

When a French resident sells their Bali villa, they face tax consequences.

The tax treaty between the two countries provides a mechanism to avoid strict double taxation on the same capital gain:

– Indonesia has the right to tax the gains, either directly (sale of property) or indirectly (sale of shares in a predominantly real estate company),

– France, as the country of residence, takes into account the tax actually paid in Indonesia when calculating its own levy.

In practice, a French tax advisor must: analyze the client’s tax situation, propose appropriate solutions, consider legislative changes, and ensure follow-up of tax returns.

1. reconstitute the cost basis of the investment (purchase price, works, fees), 2. determine the net capital gain under French law, 3. apply deductions for holding period (if applicable to the chosen structure), 4. credit or take into account the foreign tax (2.5% / 10% already paid).

The challenge is not to structure a project that multiplies layers of taxation without the possibility of crediting.

Choosing the Right Structure: Tax and Legal Trade-offs for a French Person

Faced with these rules, how should a French buyer choose between leasehold, Hak Pakai, or PT PMA? Taxation is only one parameter, but it weighs heavily in the equation.

Leasehold in Own Name: Simplicity and Light Entry Taxation

Typical profile:

– Investor wanting to limit the initial outlay,

– Goal of rental yield over 15–25 years, without intention to pass it down for generations,

– No need for a heavy commercial structure.

Tax advantages:

– No BPHTB (no land title transfer),

– Acquisition cost focused on: potential VAT (if new build and taxable seller), 10% PPh on the lease price (often included in negotiation), notary fees,

– Very moderate annual PBB.

Disadvantages:

Hak Pakai in Own Name: Long-Term Quasi-Ownership, But Strict Conditions

Typical profile:

– French person who actually settles in Bali (KITAS, “second home” visa…),

– Budget above value thresholds (minimum 5 billion IDR for a house),

– Seeking maximum legal stability over several decades.

Taxation:

– BPHTB of 5% at purchase (on taxable base),

– PPh of 2.5% on resale,

– Moderate annual PBB,

– Possible rents subject to 10% final tax if resident holder.

This solution is often seen as a compromise between the simplicity of leasehold and the heaviness of a PT PMA structure.

PT PMA + HGB: The Tool for Structured Investment Projects

Typical profile:

– Group of investors, or individual aiming for a portfolio of villas or a resort,

– Goal: intensive rental activity, professional marketing, on-site staff, etc.

Tax strengths:

– Income treated under corporate income tax logic (22–25% on net profit), with the possibility of deducting many expenses,

– Different flows (dividends, interest, royalties) may benefit from reduced treaty rates for distributions to France, according to the Franco-Indonesian treaty rules,

– Potential structuring of exits: sale of company shares rather than the property itself, with different capital gains taxation.

Drawbacks:

– Setup cost (capital, notaries, advisory),

– Operating costs (accounting, audits, filings),

– Need for clear governance to avoid any risk of tax reassessment for treaty abuse (the treaty requires real “economic substance” of the company).

A Word on Compliance: Notary, Titles and Checks

Whatever the structure, one point is non-negotiable: everything must go through a notary-PPAT. Their mission:

A French buyer would therefore be wise to:

– be assisted by independent advisors (lawyer, tax specialist) in addition to the notary, especially to coordinate the Indonesian situation with the French tax authorities,

– refuse “turnkey” nominee arrangements, even if presented as tolerated,

– demand detailed figures of total costs (acquisition, annual, exit) for each scenario.

Conclusion: Investing in Bali as a French Person, a Two-Tier Tax Operation

Buying real estate in Bali is not just about signing a contract before a local notary. For a French person, every decision – type of title, use of a company, rental strategy, holding horizon – has tax consequences both in Indonesia and in France.

A few key takeaways:

In practice, a successful project relies on dual expertise: a local advisor (Indonesian notary, lawyer) to secure titles and taxes in Bali, and a French advisor to integrate this asset into a global wealth strategy (income tax, IFI, inheritance, protection of spouse and children).

Not settling for the phrase “everyone does it” is probably the best insurance against unpleasant tax surprises, on both sides of the world.

Tax advice

Cyril Jarnias

Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.

On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.

Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.

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