Property tax in Bali: what a French-speaking investor needs to know

Bali is attracting more and more French-speaking investors, drawn by its landscapes, the quality of life and the momentum of its property market. Behind that enthusiasm, it quickly becomes essential to understand property tax in Bali as soon as you want to invest there. Between local rules, French requirements and the France–Indonesia tax treaty, it is better to plan each stage: acquisition, rental management, resale. Here is a clear overview of the tax specifics, so that you can avoid unpleasant surprises and meet your obligations as an investor in Bali.

Investing in Bali: options and tax implications from the acquisition

For a French national who wants to invest in Bali, several alternatives exist: holding a property in your own name, or going through a PT PMA (a foreign company). These choices have different consequences for tax, both for income tax in Indonesia and for French tax. It is therefore important to refer to the official public finance bulletin: BOFiP — France–Indonesia tax treaty.

A direct purchase in your own name is limited by the local land regime, which reserves full ownership (hak milik) for nationals. Foreigners have access to a right of use (hak pakai) or can set up a PT PMA. This structure makes it possible to control a property in Bali lawfully, but it involves corporate accounting and subjects the profits made to the Indonesian tax regime applicable to foreign companies.

• Acquisition in your own name: a right of use only, with transaction taxes to be expected.
• Setting up a PT PMA: registration duties, company costs, and a mandatory annual return.

Rental income in Bali: how is it taxed?

Short-term letting is often the main source of rental income in Bali for French investors. Tax treatment differs, however, according to how the property is held and the owner's tax residence. The Indonesian tax regime provides for various obligations and rates for this locally generated income.

A non-resident individual receiving rents in Bali will have to pay withholding tax on the income collected, generally set at a flat rate by the Indonesian administration. For those who go through a PT PMA, profits distributed as dividends follow a different tax treatment.

What withholding applies to rents?

How the property is held, and tax residence, change the tax. Government Regulation No. 34 of 2017 sets a final tax of 10% of the gross amount on the rental of land or a building, and excludes accommodation services from it. Tourist letting therefore does not automatically fall under this rate. A villa that collects 30,000 euros in rent does not keep the gross amount: the tax due is calculated according to the actual activity. Proof of payment remains necessary in Indonesia and, where relevant, in France. Text of the regulation: PDF of regulation No. 34 of 2017

The method of collection depends on the activity. It should not be inferred that a single rate covers both tourist accommodation and the rental of land or a building.

What are the consequences in France if you are tax-resident in France?

A French tax resident also declares this income. Article 6 of the France–Indonesia tax treaty allows Indonesia to tax income from property situated in its territory. The treaty then provides a method for limiting double taxation. It does not remove the obligation to file in France, and it does not guarantee a credit exactly equal to the Indonesian tax. The calculation is done with a tax adviser, with supporting documents. Text of the treaty: PDF of the France–Indonesia tax treaty

The amount actually paid in Indonesia is the amount that can be matched against French tax, within the limits of the treaty. No 15% rate should be treated as the rule.

Capital gain on resale and tax on gains

The possibility of making a capital gain on the resale of a property in Bali interests many investors. Tax on capital gains depends on the seller's status (an individual, or through a PT PMA), on tax residence, and on the bilateral agreements between France and Indonesia.

Government Regulation No. 34 of 2016 sets a final tax of 2.5% of the gross amount on certain transfers of rights over land or a building, with cases at 1% and at 0%. The assignment of a hak sewa does not automatically fall within that text. On the French side, a resident's capital gain is declared under the rules applicable to property situated outside France. Text of the regulation: PDF of regulation No. 34 of 2016

Where is tax on the capital gain paid?

Article 6 of the treaty allows Indonesia to tax the capital gain on property situated in its territory. France may nevertheless require a declaration. The tax credit, if it applies, is read in the treaty and checked with a tax adviser. It is not automatically equal to the tax paid in Indonesia.

The taxable base and the formalities vary according to whether the holding is direct or through a PT PMA. In every case, producing official documents remains essential in order to justify the position to both tax administrations.

What is the tax treatment of a resale through a PT PMA?

If the resale is made through a PT PMA, the transaction takes the form of a transfer of shares or of fixed assets. Tax for non-residents then follows the corporate regime, with a return and possible withholding tax on dividends paid to the ultimate beneficiary.

Here are the three points to remember, without simplifying them:

How does the France–Indonesia tax treaty protect against double taxation?

Double taxation is checked before you invest. The tax treatment depends on the taxpayer's situation, on the nature of the income and on the applicable provisions of the France–Indonesia treaty. A tax credit is not systematically secured.

Matching against French tax, where it exists, is read in the treaty and checked with a tax adviser. It requires a complete return and the retention of supporting documents.

Frequently asked questions on double taxation and property tax in Bali

• Does an Indonesian withholding tax higher than the French tax remove the need for any further payment in France? No. The treatment depends on the nature of the income, on the taxpayer's situation and on the applicable provisions of the France–Indonesia treaty. An Indonesian withholding tax does not systematically give a right to set the tax off in France.
• Does the tax credit apply automatically? No. The treatment depends on the taxpayer's situation, on the nature of the income and on the applicable provisions of the France–Indonesia treaty. It is checked with a tax adviser.
• Should you consult a specialist before investing in Bali? It is strongly recommended to seek expert tax advice in order to adapt your strategy, secure the setting up of a PT PMA, and comply fully with both the Indonesian and the French tax regimes.

Practical advice and administrative care

Moving between tax regimes, filing rental income from Bali correctly in France, managing the documentation for setting up a PT PMA, or preparing a resale: each stage requires rigour and planning. Controls are tightening on international capital flows and on property held abroad. An omission or an error exposes you to penalties that can be heavy, both in Bali and in France.

It is advisable to surround yourself with reliable local experts, to keep complete documentation, and systematically to cross-check notarial, banking and tax information. The steps must follow a strict timetable, in particular the annual filing of results in Indonesia, which is distinct from the French calendar. In short, the best security for making an investment in Bali last remains methodical planning and appropriate professional support.