Art.99
EU AI Act Guide › Chapter XII — Penalties › Article 99

Article 99 – Penalties

Penalties SME Relevant ~3 min read · 587 words

Article 99 is the penalties article — the provision that gives the EU AI Act its enforcement teeth. It sets the maximum fine levels for different categories of violation, requires member states to establish effective national penalty frameworks, and introduces proportionality protections for SMEs. The headline numbers are significant: up to 35 million euros or 7% of global turnover for the most serious violations.

! High compliance impact for SMEs

WHAT THE ARTICLE IS ABOUT

The fine structure that makes compliance non-negotiable

Article 99 establishes the EU AI Act’s penalty framework — defining the maximum fines for different categories of violation and requiring member states to lay down effective, proportionate and dissuasive penalties in their national law. It is the financial backbone of AI Act enforcement and the provision that every business operating AI systems in the EU needs to understand.

WHAT IT SAYS

Three tiers of fines — up to EUR 35 million or 7% of global turnover

  • Tier 1 — Prohibited AI practices (Article 5): fines of up to EUR 35,000,000 or, for undertakings, up to 7% of total worldwide annual turnover for the preceding financial year, whichever is higher
  • Tier 2 — Other violations of the Act (including high-risk AI obligations, GPAI obligations, transparency obligations): fines of up to EUR 15,000,000 or, for undertakings, up to 3% of total worldwide annual turnover, whichever is higher
  • Tier 3 — Supply of incorrect, incomplete or misleading information to authorities, notified bodies or other bodies: fines of up to EUR 7,500,000 or, for undertakings, up to 1% of total worldwide annual turnover, whichever is higher
  • Member states must lay down national penalty rules that are effective, proportionate and dissuasive — the figures above are maximums, not mandatory amounts
  • Penalties must take into account the interests of SMEs and startups, and their economic viability — smaller businesses should face proportionately lower fines
  • When deciding on fines, authorities must consider: the nature, gravity, duration and consequences of the infringement; intentionality or negligence; measures taken to mitigate harm; degree of cooperation; and prior infringements
  • Natural persons may also be subject to fines where they are personally responsible for infringements
  • Penalties imposed on EU institutions, bodies, offices and agencies are governed separately by Article 100

WHO IS AFFECTED

All operators of AI systems — providers, deployers, importers and distributors

WHAT IT MEANS FOR SMES

The penalties are large — but proportionality and SME protection are built in

  • The headline numbers are maximums, not starting points — a first-time, non-deliberate violation by a small business should attract a proportionally much smaller fine than a repeat, deliberate violation by a multinational
  • The explicit SME protection clause is significant: authorities are required by law to take your economic viability into account when setting fines — assert this in any enforcement proceeding
  • The 1%/3%/7% of global turnover structure means the absolute fine scales with your business size — a EUR 1 million turnover SME faces a maximum Tier 2 fine of EUR 30,000, not EUR 15,000,000
  • Cooperation with authorities and voluntary corrective action are listed mitigating factors — taking these steps immediately when an issue is identified reduces your fine exposure
  • The false information tier is particularly important: if you are under investigation, the instinct to downplay issues or provide incomplete information creates a separate, additional liability; always provide accurate and complete information to authorities
  • Intentionality significantly increases fine risk — negligent non-compliance is treated more favourably than deliberate violation; document your good-faith compliance efforts carefully

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