Fixed asset or expense: the 500 euro threshold (2026)

Quick answer. Whether a purchase is a fixed asset or expense depends first on its nature: a durable item, controlled by the business and yielding benefits beyond twelve months, is capitalised and depreciated. A consumed or maintenance outlay stays an expense. Below 500 euros net, a French tax tolerance often allows direct expensing.

At every closing, the same question returns in client files: should a purchase go on the balance sheet or straight to expenses? The reflex "under 500 euros, so it is an expense" is widespread, but incomplete and sometimes wrong. The fixed asset or expense distinction rests first on the economic nature of the outlay, and only then on a 500 euro net tax tolerance that has its own limits. This article clarifies the logic, frames that threshold and flags the traps we see most often.

Before looking at the amount, the outlay must be qualified. The decisive test is the future economic benefit: if the purchase provides a durable benefit, controlled by the business, over more than twelve months, it is a fixed asset. It goes on the balance sheet and is spread over its useful life through depreciation.

Conversely, an outlay consumed within the year, or one that merely keeps an item in its existing state (upkeep, routine repair), is an expense: it is deducted immediately from the result.

The French accounting standards (PCG, article 211-1) set four conditions to recognise a fixed asset:

• an identifiable item (separable or arising from a right);
• a positive economic value, meaning expected future economic benefits;
• an item controlled by the entity;
• a cost that can be measured reliably.

If all four criteria are met, the item is an asset. The purchase price does not change this nature: it only matters when applying a tolerance, not when deciding the substance.

To understand how the spread then works, see our guide on the depreciation charge and how it is calculated and, for short-lived items, the logic of declining-balance depreciation.

The 500 euro net threshold is not a substantive accounting rule: it is a tax tolerance, described by the French tax authority (BOFiP, BOI-BIC-CHG-20-30-10). It allows certain low-value items to be expensed directly, even though they would in theory meet the definition of an asset.

The tolerance specifically covers:

• equipment and tooling with a unit value not exceeding 500 euros net of tax;
• office equipment and furniture within the same limit;
• software with a unit value not exceeding 500 euros net of tax.

It is an option, not an obligation. Below 500 euros net and within the scope of the tolerance, the business may choose to expense the outlay. Above the threshold, or outside the tolerance, the item must be capitalised and depreciated.

The limits to know#

The tolerance has two restrictions that many overlook.

1. Office furniture: the tolerance covers only the routine renewal of furniture already in place. It does not apply to the first-time fit-out of premises (office, restaurant, shop) or to the full renewal of furniture. Equipping new premises is therefore a fixed asset, even if each chair costs less than 500 euros.
2. Items made of several parts: for modular furniture bought as separate elements, the overall price of the item is assessed, not the unit value of each piece. Splitting an invoice into lines below 500 euros does not turn a coherent set into small equipment.

The fixed asset or expense line is redrawn at every action on an existing item. The guiding rule is simple: an outlay that extends the useful life or raises the value is capitalised; mere upkeep that keeps the item in state stays an expense.

When a part must be replaced periodically and represents an identified share of the item, the component approach applies, depreciating replaceable parts separately. We detail this mechanism in our guide on component-based depreciation and its accounting treatment.

The fixed asset or expense choice is not neutral. Expensing an outlay reduces the year's result immediately; capitalising it spreads the effect over several years through depreciation. This simple trade-off affects three indicators owners watch closely:

• the result of the year, and therefore the taxable base;
• the self-financing capacity, since depreciation is not a cash outflow;
• the image of the balance sheet, because capitalising builds a visible asset.

Our firm's reading: the reflex "expense everything to cut tax" is not always right. A young company seeking to present a solid balance sheet to its bank may benefit from capitalising when the nature of the item justifies it. Conversely, multiplying low-value assets adds tracking work without real gain. The trade-off is decided file by file, according to financial strategy and consistency over time.

In audit files, a recurring friction is the artificial splitting of a global purchase into lines below 500 euros to expense everything. The tax authority assesses the overall price of the item and the real nature of the outlay, not the layout of the invoice. A fit-out billed in several lots but forming a coherent set remains a fixed asset. It is one of the simplest reclassifications for an inspector to make.

A second point of vigilance concerns first-time fit-out: we regularly see founders expense the full furniture of new premises on the basis of the unit threshold, when the tolerance does not cover that case.

A few situations fall outside the simple pattern and deserve specific attention.

• First-time fit-out of premises: the whole set is capitalised, even if each piece costs less than 500 euros net. The tolerance applies only to later routine renewal.
• Modular furniture and equipment: the overall price of the item is assessed, not the value of each module bought separately.
• Low-value software: under 500 euros net it follows the tolerance; above, it is capitalised and depreciated. For a management tool, the real cost often exceeds the licence alone, see our analysis of the total cost of accounting software and its hidden fees.
• Lots of identical items: a lot of small equipment bought together is assessed by the unit value of each item where they are genuinely independent; an inseparable set is assessed as a whole.
• Heavy repair on an existing item: if it extends the useful life or raises the value, it is capitalised; otherwise it stays an upkeep expense.

To decide cleanly at closing, we always follow the same order.

1. Qualify the nature: does the outlay create a durable benefit beyond twelve months, or keep an item in state?
2. Identify the scope of the item: isolated piece, lot, modular set, first-time fit-out?
3. Check the scope of the tolerance: equipment, renewal furniture, software, under 500 euros net?
4. Assess the threshold on the right amount: unit value or overall price depending on the case.
5. Decide and document: keep the detailed invoice and the justification of the treatment chosen.

This discipline avoids reclassifications and secures consistency from one year to the next.