Paying Tax on Real Estate in Indonesia as a Dutch Investor

How much tax do you pay as a Dutch investor on a villa in Indonesia? We compare the two most common routes: investing privately vs. through a PT PMA.

You have a villa in Lombok and the rental income is coming in. How much tax do you pay, and where? It’s not as bad as you might think — but there are some pitfalls.

Two routes

You have two options: investing privately (as an individual) or through a PT PMA (Indonesian company). The choice determines how much you pay and in which country.

Route 1: Private investment (most common)

In Indonesia

20% withholding tax on your gross rental income. Your property manager withholds this and pays it to the authorities. Keep the payment receipt — you will need it for your Dutch tax return.

0.1% property tax per year. A negligible amount.

11% VAT when purchasing a newly built villa. One-time payment.

In the Netherlands

Your villa falls under Box 3. You pay tax on a deemed return, not on the actual rental income. The 20% already paid in Indonesia can be offset through the tax treaty. In practice, you do not pay tax twice.

Example calculation

Route 2: Through a PT PMA

22% corporate income tax in Indonesia on profits (after deductible expenses). Potentially 11% VAT on rental revenue, depending on your registration status.

In the Netherlands, dividend distributions fall under Box 2: 33%. The combination of 22% in Indonesia + 33% in the Netherlands is heavier than investing privately. Unless you reinvest profits within the PT PMA.

When does a PT PMA make sense?

For multiple properties, active development (buying-building-selling), or if you plan to move to Indonesia. For one or two villas, private ownership is almost always more tax-efficient.

Purchase costs

Mistakes you want to avoid

Not offsetting withholding tax. If you do not report the Indonesian withholding tax in your Dutch tax return, you may pay twice. A waste.

Declaring Box 3 incorrectly. Use the real market value, not the purchase price. Reporting too low can lead to corrections and penalties.

Not keeping records. Keep everything: withholding tax receipts, PBB assessments, VAT payments. The Dutch Tax Authority may ask for them.

Disclaimer

This is general information, not tax advice. Tax laws change and your situation may differ. Speak with a tax advisor experienced in international real estate before making decisions.

Want to know what this looks like in practice? Contact us or view our properties.

Back to: Investing in real estate in Lombok: the complete guide