What are the penalties for EU AI Act non-compliance?+
Article 99 of the EU AI Act defines three tiers. Use of a prohibited practice under Article 5 is punishable by up to EUR 35 million or 7% of worldwide annual turnover, whichever is higher. Breach of most other obligations (high-risk AI, notified body duties, GPAI obligations) can cost up to EUR 15 million or 3% of worldwide turnover. Supplying misleading information to regulators is capped at EUR 7.5 million or 1% of turnover. The higher of the two applies for standard companies.
How are AI Act fines calculated?+
For each tier the regulator compares a fixed EUR cap with a percentage of your worldwide annual turnover from the preceding financial year and applies the higher of the two. Turnover is counted group-wide. The actual fine within that ceiling depends on the nature, gravity and duration of the infringement, whether the violation was intentional or negligent, how the company cooperated with authorities, the size of the operator and the extent of any financial benefit gained.
Are there reduced penalties for SMEs and startups?+
Yes. Article 99(6) flips the rule for SMEs, including startups: the lower of the fixed cap or the turnover percentage applies instead of the higher. In practice this caps a small company's exposure to the percentage-based figure, which can be a fraction of the headline numbers. SME status is defined by the EU recommendation 2003/361/EC (fewer than 250 employees and either turnover ≤ EUR 50M or balance sheet ≤ EUR 43M).