Investing in property in Bali in your own name or through a PT PMA

Every year, Bali attracts many foreign investors tempted to buy a villa or land on this well-known island. Between the dream of owning property in Bali and Indonesian administrative reality, it becomes essential to understand the different ways of buying, particularly in light of the specifics of local law. Should you invest in your own name, generally through a leasehold? Or open a PT PMA in order to hold an HGB and obtain broader rights? This article guides French-speaking investors through the options available, their respective advantages, their constraints, and the profiles they are aimed at.

The main types of ownership in Bali: in your own name, leasehold, PT PMA and HGB

Foreign investors' access to the Balinese property market depends heavily on the form of ownership chosen. Hak milik is not open to a foreigner. Government Regulation No. 18 of 2021 sets, in particular, the ceilings for HGB and hak pakai on state land. Text of the regulation: PDF of regulation No. 18 of 2021. A distinction then has to be drawn between holding under hak sewa and holding through a local company, often a PT PMA.

Buying a villa in Bali is therefore never as simple as in France. Whether the project is rental property, a second home or a hotel operation, each project points to a specific legal structure. Three main formulas then appear: a leasehold in your own name, setting up a PT PMA with an HGB, and, exceptionally, certain hybrid structures for commercial or mixed activities.

In your own name and leasehold: how does it work?

Even though a foreigner cannot obtain hak milik, they can sign a hak sewa, often called a leasehold. The term and the conditions are those of the contract. Renewal is not automatic. This lease is not the same as an HGB or a hak pakai, whose terms follow other rules. Assignment of the remaining right exists only if the contract allows it.

This remains the favourite option today for many investors who want to invest in property in a simplified way, for a base in Bali or a holiday villa. The acquisition is generally made off-plan or through a local notary, who will register the contract with the land administration.

PT PMA and HGB: what property rights does a foreign investor have?

A PT PMA can, if the activity and the regulation allow it, hold an HGB. It may be suitable for a commercial activity. It is not the only form that authorises a tourism operation. A hak sewa is not, on its own, an authorisation to operate. The conditions depend on the activity, the authorisations, the zoning and the structure used.

A PT PMA, however, never gives access to hak milik, which is reserved for Indonesian citizens. Its incorporation does not, on its own, open the right to work in Indonesia or the right to distribute dividends. Those points are checked according to the activity, the authorisations and the applicable tax.

Comparing rights, tax, operation, costs and resale

To choose the best structure, every criterion should be examined: the rights granted, the overall cost, the risks, the terms of resale and the tax treatment. Here is a concise overview of the key points to assess when you want to buy a villa in Bali or launch an activity on the island.

Ownership rights and transfer

A hak sewa confers the use provided for in the contract, not full ownership. Assignment of the remaining right exists only if the contract allows it. A PT PMA is not, as a matter of principle, more flexible: a transfer of shares depends on the authorisations required.

Legal security does not depend on a minimum term. It is checked against the quality of the contract, the title, the controls carried out and the rights actually granted.

Tax and annual costs

An investor acting in their own name mainly bears the annual property tax (PBB) and the duty charged on the deed (BPHTB) at the time of the transaction. With a PT PMA, there are also company set-up costs, ongoing accounting costs, and potentially income tax if the operation generates profits.

The tax on a letting is checked according to the activity, the structure and the taxpayer's situation. VAT, a withholding tax or tax on dividends does not apply automatically. No rate is stated here.

Rental operation and regulation

A hak sewa in your own name is not an authorisation for tourist letting. Operating it without the appropriate licences exposes you to an administrative and tax risk. A PT PMA holding an HGB is a route used for a commercial activity, when the activity code allows it. It is not, on its own, proof that no other form exists. The structure should be confirmed before any letting begins.

This distinction is crucial, because it determines the real return on a rental property investment in Bali. Those who cross the regulatory line without a company take a serious administrative, and even judicial, risk.

Legal obligations, liability and resale

Buying a villa on a leasehold mainly engages the ordinary civil liability of a long-term lessee, who contracts with the local owner. If the villa is held by a PT PMA, it is the company that assumes all the obligations, tax as well as social, with stronger traceability of the funds and of the ultimate beneficiaries.

On a resale, a leasehold is akin to a transfer of the remaining right of use, whereas an exit through a PT PMA takes the form of a sale of shares, often considered simpler to organise if the company is well structured and the documentation is complete.

Comparison of property solutions in Bali

Here is a concise overview so that the fundamental differences between the ways of buying and holding property in Bali can be seen quickly:

Suitable profiles and combining strategies in Bali

Choosing between holding in your own name through a leasehold and setting up a PT PMA depends not only on your project, but also on your appetite for risk and for administrative formality. Each structure matches different needs, and some well-advised investors opt for a perfectly lawful combination of the two, according to their asset objectives.

For acquisitions intended for strictly residential use — a holiday home, retirement, regular stays — a simple leasehold provides a reassuring, low-cost framework, with lighter procedures. By contrast, any wish to run a profitable activity, to let the property, or to plan an easier succession points towards a PT PMA, despite its greater administrative weight.

• Leisure profile: get the most from a leasehold if you simply want to enjoy a villa with no business project.
• Entrepreneur or rental-investor profile: a PT PMA can carry a rental or commercial operation if the activity allows it. It can make a transfer of shares easier. It is not, as a matter of principle, safer than a hak sewa.
• A mix is possible: some people choose a leasehold and then set up a PT PMA to collect the rents and declare the income. This structure, however, requires specialist advice.

A trust or a nominee is not presented here as a safe structure. The effects on the lease are checked against the contract and with a lawyer. Cancellation and eviction are not automatic.

FAQ: essential answers on property in Bali for a foreign investor

Before considering buying a villa in Bali, many practical questions deserve clarification. Here are a few concise answers to complete the overview.

Can you become the full owner of land in Bali?

Foreign investors can never hold hak milik (full ownership) directly. Only long-term leases (leasehold) or a right of use through a PT PMA are available; any promise to the contrary amounts to fraud.

The law protects only a temporary right of enjoyment or commercial use, never total possession of the land by a non-Indonesian citizen.

What are the risks of buying on a leasehold?

Besides the absence of full ownership, the main risk comes from poor drafting of the lease, from uncertain renewal, or from an unreliable local partner. Going through a specialist notary, and consulting experienced lawyers, considerably limits these dangers.

Resale is harder on a short lease. Always favour a long leasehold, verified in writing, with the renewal and inheritance conditions stated.

When does a PT PMA become essential?

A PT PMA can be considered for a tourism activity or to structure a larger project. It is not required as a matter of principle for every letting. The licences and the activity code are confirmed before launch.

Take care, though: without a business project or a commercial operation, the administrative weight of the company can put off those who came to Bali looking for absolute simplicity.

Outlook and practical advice for the future

Bali remains one of the leading destinations for those who want to combine life in the tropics with an investment that can gain value. Investing in property in Bali, however, means accepting local reality, far from the rules that apply in France. The choice of structure will always depend on your profile, your ambitions and your investment horizon.

Surrounding yourself with specialist French-speaking lawyers helps you avoid the classic mistakes: careless leases, nominee companies, tax oversights. By anticipating regulatory changes and favouring legal security, each investor can make the most of a market which, for all its momentum, is no risk-free promised land.