[ MSP.DD ] For investors and founders · Updated
What are the fines under the EU AI Act?
Short answer
Up to €35 million or 7% of worldwide annual turnover for prohibited AI practices, up to €15 million or 3% for breaching most other obligations, and up to €7.5 million or 1% for supplying incorrect or misleading information. Large companies face the higher of the two figures. SMEs and start-ups face the lower.
Why it matters
The fine levels set the size of the risk a buyer takes on. For a start-up the cap is the lower figure, which matters for how exposure is priced.
How to use this in due diligence
- 01Identify which obligations apply to the target's AI systems.
- 02Estimate exposure from the target's turnover and the relevant cap.
- 03Check whether any current practice could fall under the Article 5 prohibitions.
- 04Ask for any correspondence with regulators.
Red flags
- Any feature that could fall under Article 5 prohibitions.
- Incomplete answers to regulators, which carry their own fine level.
Good signs
- A documented risk classification per AI system.
- Legal review of borderline features.
The numbers
- Article 99: up to €35 million or 7% of worldwide annual turnover for prohibited practices; up to €15 million or 3% for most other obligations; up to €7.5 million or 1% for incorrect, incomplete or misleading information. [1]
- For SMEs and start-ups, each fine is capped at the lower of the two figures, not the higher. [1]
- The penalties chapter applies from 2 August 2025. [2]