The Europe-Dubai–Bali Connection

The Europe – Dubai – Bali Connection

This isn’t the title of a new thriller. No, it describes the flight of capital from Europe that ultimately ends up in Bali, often passing through Dubai. Europe could just as easily be replaced by the United States in this case. Especially in the past year, we’ve seen a surge in capital following this path. This year, we’ve already assisted several clients who have chosen Dubai and Bali as their new investment destinations.

In this blog, we’ll take you along on the journey that capital makes.

Europe

As we mentioned in an earlier blog, investors are becoming less interested in putting their money into their own countries, often in Western Europe. High taxes, an unfavorable investment climate with strict regulations, and low or even negative interest rates on bank accounts are pushing people to look for opportunities elsewhere. One such opportunity can be found in Dubai.

Dubai

The first step many investors take is buying an apartment in Dubai or one of the other Emirates. This provides them with an address, which allows them to, for example, start a company. They can then draw a salary from this company. A significant advantage is that in Dubai and the rest of the United Arab Emirates (UAE), there is currently no income tax on personal earnings, including salaries drawn from a company. This makes Dubai highly attractive for entrepreneurs and investors to establish a business.

However, there are other costs to consider, such as licensing fees for companies, and potentially VAT (5% since 2018) that applies to certain goods and services. Additionally, it's important to note that tax exemptions can vary depending on the specific zones you operate in, such as Free Zones or the Mainland. Since regulations may change, it’s always a good idea to check the current laws or seek advice from a local specialist.

Bali

The next step for many investors is to invest in a villa. Bali’s tourism market has been booming for years, and the demand for rental accommodations remains high. This makes it attractive to build a villa and rent it out through a villa management company. It’s realistic to expect net returns of 10 to 12% per year from rentals, meaning a villa can be paid off within a few years.

Many people then choose to funnel the rental income back to Dubai, where they have for example a management company. As mentioned earlier, they can draw a salary from this company without having to pay income tax on it.

For those who prefer to skip Dubai, we recommend setting up a PT/PMA company in Indonesia. One of the benefits of this is the ability to open a local bank account. Your rental income can be deposited into this account and transferred to, for example, a deposit account. In Indonesia, it is still possible to obtain net interest rates of around 6% on savings accounts. This helps accelerate the return on your investment.

Another great advantage is that you can enjoy your holidays in your own villa, basking in all the tropical luxuries Bali has to offer. Who wouldn’t want to have such an investment?