Tax Guide for Foreign Property Owners in Lombok

Tax is one of the most frequently avoided conversations in property investment. Here is what foreign investors actually owe in Indonesia, and what obligations you likely have in your home country.

Indonesian taxes on property acquisition

BPHTB (Bea Perolehan Hak atas Tanah dan Bangunan)

This is the land and building acquisition tax, equivalent to stamp duty in Western countries. It is set at 5% of the transaction value and is paid by the buyer at the time of signing. On a €150,000 property, this adds €7,500 to your acquisition cost.

PPh (Income Tax on Transfer)

The seller pays 2.5% of the transaction value as final income tax. In practice, buyers sometimes negotiate to absorb part of this to facilitate a deal — but it is legally the seller's liability.

Annual property tax (PBB)

PBB (Pajak Bumi dan Bangunan) is an annual land and building tax assessed by the local government. Rates vary by area but are generally low — typically equivalent to €50–500 per year for a villa plot. It is your responsibility to pay this regardless of whether you are earning rental income.

Rental income tax in Indonesia

If your property generates rental income, Indonesia taxes it at 10% final tax on gross rental revenue for non-residents using a PT PMA or individual leasehold structure. This is withheld at source if the rental agent or platform is Indonesian; otherwise you declare and pay it directly.

This 10% is applied to gross revenue — not net profit. On €25,000 gross rental income, you owe €2,500 in Indonesian tax regardless of your expenses.

Capital gains on sale

The PPh on transfer (2.5% of transaction value) applies when you sell or transfer your leasehold interest. There is no separate capital gains tax in Indonesia for property — the 2.5% final tax covers it.

Your obligations in your home country

This is where many investors have gaps. France, Germany, the Netherlands, Belgium, and most EU countries require residents to declare worldwide income, including foreign rental income and capital gains.

• France: Rental income from Lombok must be declared on your French tax return under foreign income. Tax treaties between France and Indonesia generally give Indonesia taxing rights on Indonesian-source income, with a credit mechanism to avoid double taxation.
• Other EU countries: Similar framework applies. Check the specific double tax treaty between your country and Indonesia.

Do not assume that because you paid tax in Indonesia, your home country requires nothing. Disclosure obligations often exist even when the tax itself is offset by treaty credits.

Practical recommendation

Before completing your acquisition, consult a tax advisor in your home country who has experience with Indonesian investments. The structuring decisions (individual leasehold vs PT PMA) can have significant tax implications that are not reversible after the deal closes.