Micro-BIC or Actual-Expenses Regime: How to Choose in 2026?

Every year, thousands of self-employed people in France — consultants, furnished-rental landlords, tradespeople, sole traders — face the same decision: stay with the micro-BIC (the flat-rate income tax regime for commercial activities) or switch to the régime réel, the actual-expenses regime? The question looks technical. It is, in practice, decisive, because the tax regime directly determines your taxable base and therefore the income tax you pay on your activity.

What makes the decision difficult is that the micro-BIC has a reassuring image of simplicity, while the actual-expenses regime is often seen as complex and reserved for larger businesses. That perception is misleading. In many client files, the actual-expenses regime is more advantageous as soon as real costs cross a specific threshold — and that threshold arrives sooner than expected, particularly in furnished rentals (LMNP — location meublée non professionnelle) or in service businesses with significant running costs.

The micro-BIC suits you when your real costs are low relative to your turnover. The actual-expenses regime becomes superior as soon as your real expenses and depreciation exceed the flat-rate allowance that applies to your activity: 71% for goods sales, 50% for BIC services, and 34% for liberal professions (micro-BNC). In 2026, the micro thresholds have been revised upward to €203,100 (goods) and €83,600 (services), but crossing a threshold is not the only reason to switch.

The micro-BIC and the actual-expenses regime differ on one fundamental point: how your taxable income is calculated.

Under the micro-BIC, the French tax authority applies a flat-rate allowance intended to represent your costs. You deduct nothing beyond that: no professional rent, no depreciation on equipment, no loan interest, no real costs. The allowance is supposed to cover all of that in aggregate. If your real costs are lower than the allowance, you benefit. If they exceed it, you pay tax on income that does not reflect your economic reality.

Under the actual-expenses regime (régime réel simplifié or réel normal), you deduct costs actually incurred and you can depreciate durable investments: equipment, furniture, vehicles, improvement works. The accounting is more demanding, but the taxable base reflects your real situation.

The last line is often overlooked. The actual-expenses regime generates additional accounting fees. Those fees must be included in any simulation: if the tax saving is €800 but the accounting mission costs €1,200, the actual-expenses regime is not necessarily worth it for that specific file.

The micro regime thresholds were revised upward on 1 January 2026 for the 2026-2028 period. This triennial revaluation applies to all active micro-entrepreneurs.

Note: thresholds are prorated if the activity starts mid-year. A business launched on 1 July 2026 would have a goods threshold of approximately €101,550 for that year.

A critical distinction: the micro thresholds are not the same as the VAT exemption thresholds. In 2026, the VAT franchise (exemption from collecting VAT) remains at €85,000 for goods and €37,500 for services. A service provider with €70,000 in turnover can qualify for the micro regime while still being required to charge VAT. These two regimes are independent and must be analysed separately.

Source: entreprendre.service-public.fr — new 2026 micro thresholds

Switching to the actual-expenses regime is justified in four distinct situations, which are not mutually exclusive.

1. Your real costs exceed the flat-rate allowance. This is the primary trigger. If you are a BIC service provider and your real costs represent more than 50% of your turnover, the actual-expenses regime is mechanically more advantageous. Likewise for a trader whose purchases and overheads exceed 71% of turnover.

2. You have investments to depreciate. Depreciation of a vehicle, IT equipment, furniture, or improvement works does not exist under the micro-BIC. Under the actual-expenses regime, these costs spread over the useful life of the asset reduce your taxable base each year.

3. Your activity generates losses in the early years. The micro-BIC can never produce a tax loss (a minimum allowance floor of €305 applies). The actual-expenses regime allows you to recognise a loss and carry it forward against future income of the same category, which can be valuable during an investment or slow-start phase.

4. You need precise visibility on profitability. The micro-BIC tells you nothing about your real margin. To take meaningful decisions — setting prices, evaluating an investment, choosing between two business models — accounts prepared under the actual-expenses regime give clarity that the flat-rate system cannot.

Two concrete cases illustrate the trade-off.

Case 1 — Service provider with €60,000 turnover and €15,000 in real costs

Under micro-BIC (services), the allowance is 50%:

• Taxable income = €60,000 x (1 - 50%) = €30,000
• Your €15,000 in real costs are ignored

Under actual-expenses regime:

• Taxable income = €60,000 - €15,000 = €45,000
• Result: micro-BIC is more advantageous here (€30,000 < €45,000)

This provider benefits from staying on micro, because the flat-rate allowance (€30,000) exceeds the real costs (€15,000). They receive €15,000 in notional extra deduction.

Case 2 — Service provider with €60,000 turnover and €36,000 in real costs

Under micro-BIC:

• Taxable income = €30,000 (same allowance)

Under actual-expenses regime:

• Taxable income = €60,000 - €36,000 = €24,000
• Result: the actual-expenses regime is now the winner

The tipping point sits exactly at 50% of costs for a BIC service provider, 71% for a goods seller, and 34% for a liberal profession under micro-BNC. That is the core rule to remember.

Case 3 — Furnished rental (LMNP) with depreciation

This is often the clearest case. A furnished rental landlord with a property acquired at €200,000 generates significant annual depreciation (building, furniture, works). Under micro-BIC, the allowance is 50% of rental income — but depreciation does not exist. Under the LMNP actual-expenses regime, depreciation of the building and furniture can neutralise a large portion — sometimes all — of the taxable rental income for many years. In our LMNP client files, the actual-expenses regime is almost always more favourable as soon as the property has meaningful capital value. Our LMNP accounting service in Paris covers this mechanism in detail.

The option does not take effect whenever you decide. It follows a precise calendar set by the tax authorities (Service des Impôts des Entreprises, SIE).

Steps to opt for the BIC actual-expenses regime:

1. Check the option deadline: it falls before the filing deadline for the previous year's income tax return (in practice, before May/June of year N for application in year N).
2. Send a simple letter of option to the SIE covering your business address, or file through your professional account on impots.gouv.fr.
3. State in your letter: your full name, SIRET number, chosen regime (simplified or normal actual-expenses), and the year of application.
4. Keep the acknowledgement of receipt or confirmation.
5. Set up your actual-expenses accounting from 1 January of the application year: journal, supporting documents, fixed-asset register.

Duration of the option: the option is binding for two years, automatically renewed unless you notify the SIE before the deadline of the relevant year. You cannot "test" the actual-expenses regime for a single year and revert to micro-BIC the following year. The minimum commitment is two accounting periods, which makes the initial simulation essential.

Source: BOFiP — option for the actual-expenses BIC regime

In the creation and early-stage files we work on, regime errors follow recurring patterns.

Micro by default. Many entrepreneurs stay on micro because they started there and never reran the numbers. Two years in, turnover has grown, equipment has been purchased, a workspace has been rented — and the micro regime still applies, generating an unnoticed tax overpayment.

Confusing the micro threshold with the VAT threshold. This is a frequent mistake, particularly for service providers. Exceeding €37,500 in service turnover triggers a VAT liability, regardless of the micro regime. Some entrepreneurs discover this obligation too late, with retroactive VAT assessments to settle.

Actual-expenses regime not cost-effective for very small structures. Conversely, we sometimes see founders switching to the actual-expenses regime on third-party advice without having simulated the accounting cost. For a business with €30,000 in turnover and few expenses, the tax saving from the actual-expenses regime can be lower than the accounting fees it generates. The actual-expenses regime is not always the answer.

Under-estimating depreciation in LMNP. In furnished rentals, depreciation is the main advantage of the actual-expenses regime. Many landlords do not realise they can depreciate not only the furniture but also the building structure (excluding land). This mechanism is too valuable to overlook.

One point rarely mentioned: under micro-BIC, you can never show a tax loss. The minimum floor allowance of €305 means even €1 of turnover generates a nominal taxable base. This simplification conceals situations where the activity is not actually profitable. A service provider with €40,000 in turnover and €38,000 in real costs will be taxed on €20,000 under micro (50% allowance) even though they are economically earning only €2,000. The actual-expenses regime would allow them to recognise their real position — and potentially a loss to carry forward.

The revised micro thresholds (€203,100 / €83,600) make the regime accessible to more entrepreneurs, but they do not change the logic of the choice: comparing real costs against the flat-rate allowance remains the right criterion.

The VAT exemption threshold is unchanged at €85,000 (goods) and €37,500 (services) — the proposed single threshold of €25,000 was definitively abandoned by law n° 2025-1044 of 3 November 2025. If you fall between these two levels (micro-BIC accessible but VAT exemption exceeded), you must charge VAT even while remaining on micro. This requires careful attention on your quotes and invoices.

For more on the implications of the auto-entrepreneur status, see our article auto-entrepreneur status: what you need to know before launching. If you practise a liberal profession, our article on the micro-BNC regime covers the allowances specific to your income category.

The decision between micro-BIC and the actual-expenses regime cannot be made on the basis of a general article, however detailed. It requires a simulation using your real data: projected turnover, identified costs, planned investments, and your personal tax situation.

For more complex professional tax questions, our tax advisory team in Paris can guide you through the full picture.

Professional disclaimer. This article sets out general principles current as of 29 May 2026. It does not replace a personalised review of your file. Tax rules change, and all thresholds, allowances and deadlines should be verified with your accountant or the competent tax authority. Opting for the actual-expenses regime commits you for a minimum of two financial years and requires a prior simulation using your real figures.

Sources: entreprendre.service-public.fr — BIC actual-expenses regime | entreprendre.service-public.fr — 2026 micro thresholds | entreprendre.service-public.fr — VAT franchise | BOFiP — actual-expenses option — Updated 29 May 2026.