EU AI Act Fines: How Much Could Non-Compliance Cost Your Business?

The Three-Tier Fine Structure

The EU AI Act establishes three tiers of administrative fines, scaled by violation severity:

Tier 1 (most severe): Up to 35 million euros or 7% of global annual turnover for violations of Article 5 prohibited practices. This is the harshest penalty in any EU digital regulation, exceeding even GDPR.

Tier 2: Up to 15 million euros or 3% of global annual turnover for violations of high-risk AI requirements (Articles 9-15, 26-27) and general-purpose AI model obligations.

Tier 3: Up to 7.5 million euros or 1% of global annual turnover for supplying incorrect, incomplete, or misleading information to authorities.

SME Proportionality

The EU AI Act explicitly requires that fines be proportionate to the size and economic strength of the organisation. For SMEs and startups, the regulation mandates that the lower of the two figures (fixed amount or percentage of turnover) applies.

Additionally, national authorities must consider: the nature, gravity, and duration of the violation; whether actions were taken to mitigate harm; the degree of cooperation with authorities; and any previous violations. A small business making a good-faith compliance effort is unlikely to face maximum penalties.

Enforcement Timeline

National AI authorities are being established across EU member states. Most will be operational by August 2026. Initial enforcement is expected to focus on high-risk sectors and large-scale AI deployments.

For SMEs, the practical risk of enforcement action before 2027-2028 is low, provided you have documented your AI literacy measures (Article 4) and are not operating in high-risk AI categories. However, this should not be an excuse for complacency — document your compliance efforts now.

This article is for informational purposes only and does not constitute legal advice. Regulatory requirements change frequently — verify current rules with official sources. Built by Sawai Gyoseishoshi Office, Hiroshima, Japan.