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EU AI Act fines: what deployers and SMEs actually face
The headline number for EU AI Act fines is EUR 35 million or 7% of worldwide turnover. That figure is real, but it applies to one kind of breach. A company that uses AI rather than builds it is far more likely to meet the second tier, and if it is an SME, a different rule for which cap applies.
The tiers that matter to a deployer
| Breach | Up to | For an SME or start-up |
|---|---|---|
| A prohibited practice (Article 5) | EUR 35 000 000 or 7% of worldwide annual turnover, whichever is higher | whichever is lower |
| Deployer obligations (Article 26) | EUR 15 000 000 or 3%, whichever is higher | whichever is lower |
| Transparency obligations (Article 50) | EUR 15 000 000 or 3%, whichever is higher | whichever is lower |
For small mid-cap companies the "whichever is lower" rule also applies to the second tier, but not to the fine for prohibited practices. The verified penalty provisions.
Fines are the ceiling, not the menu
The regulation leaves the penalty rules to member states. They can include administrative fines, warnings and non-monetary measures, and authorities must take into account the interests of SMEs and start-ups and their economic viability. The numbers above are maximums, not tariffs.
What puts a company in each tier
- Prohibited practice. Inferring the emotions of employees or candidates, for example from video interviews or voice, except for medical or safety reasons. The workplace ban.
- Deployer obligations. Running a high-risk system, such as a candidate ranking feature, without the oversight, monitoring or information duties in Article 26. Is your HR software high-risk?
- Transparency. A customer-facing chatbot that does not make clear it is AI, or a deep fake without disclosure. Article 50.
Where this fits
The cheapest defence is being able to show what you did and why. The AI Act at Work is written for employers using AI on candidates and staff, and builds that record use by use: the register, the oversight log, the notices to workers and the answers to people who ask why.