Bali's legal framework isn't complicated — it comes down to knowing which structure is legal, which is convenient, and which is dangerous.
This text provides guidance for the European investor, but is not legal or tax advice. Every transaction is structured individually with a licensed notary (PPAT) and a tax advisor.
Can a foreigner own property in Bali?
Hak Milik — full ownership of the land (freehold) — is reserved exclusively for Indonesian citizens. A foreigner cannot hold it directly. This, however, does not mean there is no access to the market. There are several legal structures that give a foreigner long-term and protected rights over property in Bali.
Leasehold
The most accessible and most common path. This is a notarized lease agreement with the landowner, usually for a term of 25–50 years with extension clauses. The rights are fully preserved: you can sell, inherit and sublease. The plot is certified through a notary and registered in the state cadastre. Leasehold does not require a residence permit and for the private investor it is often the most practical choice — faster returns due to the lower entry price.
Hak Pakai (right of use)
Long-term right of use, usually up to 30 years with extension options. It is available to holders of a residence permit — KITAS, KITAP or a „Second Home“ visa. It is suitable for investors who plan to live or spend long periods on the island.
PT PMA and HGB
PT PMA is a foreign-invested company registered in Indonesia that can hold land under HGB HGB (Hak Guna Bangunan) — right to build and use for legal entities and foreigners, usually 30 + 20 + 30 years. Following the regulatory change of October 2025, the minimum paid-in capital for PT PMA is IDR 2.5 billion (around $150,000). This structure is suitable for investors who manage several properties or operate at a larger scale.
Freehold (Hak Milik)
Full ownership of the land is available for foreigners only through a structure (e.g. PT PMA), but for the private investor it is usually unnecessary. Returns on leasehold are often faster due to the lower entry ticket, while the rights — sale, inheritance, lease — are preserved.
Nominee structures
This is a practice in which an Indonesian citizen holds the property formally on behalf of a foreigner, in order to circumvent the prohibition on Hak Milik. Indonesian law does not recognize such circumvention agreements — they are legally void and carry serious risk for the foreigner. We therefore do not recommend them. Instead, use the legal structures: leasehold, Hak Pakai or PT PMA.
Permits you need to check
- PBG (Persetujuan Bangunan Gedung) — a building permit which, since 2021, has replaced the old IMB. Without it, the property may be illegal and even at risk of demolition.
- IMB — the old building permit. It remains valid for already built properties; but new projects must have a PBG.
- HGB / land status — a guarantee that the project is on land with proper status and that construction may be built on it.
- NIB — business license. For properties that are leased out, the lack of an NIB creates a risk of deregistration from platforms like Airbnb and Booking.com.
Land zoning
Every plot of land in Bali has a zoning status that determines what can be built. Compliance with it is strictly mandatory:
- Red — commercial properties only (shops, offices, licensed hotels).
- Pink — tourist properties (hotels, restaurants, spas).
- Orange — mixed residential and commercial use.
- Yellow — residential construction (houses, villas, apartments); for leasing out, you need a license or a management company that holds one.
- Green — agricultural land where capital construction is prohibited.
The status of a given plot can be checked in the official state portal (gistaru.atrbpn.go.id) by the certificate number of ownership.
Taxes and expenses
When buying
- VAT (PPN) 1% — only when buying a new property directly from a developer or a registered company; does not apply to resale between private individuals.
- BPHTB 5% — acquisition tax for freehold transactions, payable by the buyer.
- Notary fees ~1% — for transfer of ownership and documents; sometimes shared between the parties.
- Agency — 0.1% when purchasing from a developer; from 5% on the secondary market.
On sale
- PPh Final — 2.5% on the declared value for freehold (borne by the seller); 10–20% for leasehold depending on whether a tax number (NPWP) is available.
Rental tax
- 10% final tax on gross rent for local individuals/owners with an NPWP.
- 20% withheld tax for foreign non-residents; can often be reduced to around 10% under a double tax treaty (DTT) between Indonesia and your country.
Dividend tax
- 10% for local shareholders; 20% for foreign ones (may be reduced under a DTT). Loan repayments are not treated as dividends.
Can proceeds be transferred to Europe?
Yes. Indonesian law expressly protects the right of foreign investors to transfer funds abroad — rental income, sale proceeds and capital gains — after payment of due taxes. SWIFT transfers are available to virtually any country, and double tax treaties can often make taxes paid in Indonesia creditable.
Due diligence before signing
- Checking the zoning — that it is not green/agricultural land.
- Checking the ownership certificate at the National Land Agency (BPN) — that it matches the seller's identity and that there are no encumbrances.
- A valid building permit (PBG or an effective IMB).
- A registered NIB for a leased property.
- No inheritance or family disputes over the land.
- Paid previous taxes (PBB, etc.) by the seller.
The notary (PPAT) is mandatory for the transfer, but his role is primarily procedural — he does not always flag all risks. That is why we recommend an independent legal review, separate from the notarial process.
For a specific case, contact us for investment analysis and we will refer you to a licensed notary and tax advisor.