- In accordance with the terms and conditions laid down in this Regulation, Member States shall lay down the rules on penalties and other enforcement measures, which may also include warnings and non-monetary measures, applicable to infringements of this Regulation by operators, and shall take all measures necessary to ensure that they are properly and effectively implemented, thereby taking into account the guidelines issued by the Commission pursuant to Article 96. The penalties provided for shall be effective, proportionate and dissuasive. They shall take into account the interests of SMEs, including start-ups, and their economic viability.
- The Member States shall, without delay and at the latest by the date of entry into application, notify the Commission of the rules on penalties and of other enforcement measures referred to in paragraph 1, and shall notify it, without delay, of any subsequent amendment to them.
- Non-compliance with the prohibition of the AI practices referred to in Article 5 shall be subject to administrative fines of up to EUR 35 000 000 or, if the offender is an undertaking, up to 7 % of its total worldwide annual turnover for the preceding financial year, whichever is higher.
- Non-compliance with any of the following provisions related to operators or notified bodies, other than those laid down in Articles 5, shall be subject to administrative fines of up to EUR 15 000 000 or, if the offender is an undertaking, up to 3 % of its total worldwide annual turnover for the preceding financial year, whichever is higher:
- (a) obligations of providers pursuant to Article 16;
- (b) obligations of authorised representatives pursuant to Article 22;
- (c) obligations of importers pursuant to Article 23;
- (d) obligations of distributors pursuant to Article 24;
- (e) obligations of deployers pursuant to Article 26;
- (f) requirements and obligations of notified bodies pursuant to Article 31, Article 33(1), (3) and (4) or Article 34;
- (g) transparency obligations for providers and deployers pursuant to Article 50.
- The supply of incorrect, incomplete or misleading information to notified bodies or national competent authorities in reply to a request shall be subject to administrative fines of up to EUR 7 500 000 or, if the offender is an undertaking, up to 1 % of its total worldwide annual turnover for the preceding financial year, whichever is higher.
- In the case of SMEs, including start-ups, each fine referred to in this Article shall be up to the percentages or amount referred to in paragraphs 3, 4 and 5, whichever thereof is lower.
- When deciding whether to impose an administrative fine and when deciding on the amount of the administrative fine in each individual case, all relevant circumstances of the specific situation shall be taken into account and, as appropriate, regard shall be given to the following:
- (a) the nature, gravity and duration of the infringement and of its consequences, taking into account the purpose of the AI system, as well as, where appropriate, the number of affected persons and the level of damage suffered by them;
- (b) whether administrative fines have already been applied by other market surveillance authorities to the same operator for the same infringement;
- (c) whether administrative fines have already been applied by other authorities to the same operator for infringements of other Union or national law, when such infringements result from the same activity or omission constituting a relevant infringement of this Regulation;
- (d) the size, the annual turnover and market share of the operator committing the infringement;
- (e) any other aggravating or mitigating factor applicable to the circumstances of the case, such as financial benefits gained, or losses avoided, directly or indirectly, from the infringement;
- (f) the degree of cooperation with the national competent authorities, in order to remedy the infringement and mitigate the possible adverse effects of the infringement;
- (g) the degree of responsibility of the operator taking into account the technical and organisational measures implemented by it;
- (h) the manner in which the infringement became known to the national competent authorities, in particular whether, and if so to what extent, the operator notified the infringement;
- (i) the intentional or negligent character of the infringement;
- (j) any action taken by the operator to mitigate the harm suffered by the affected persons.
- Each Member State shall lay down rules on to what extent administrative fines may be imposed on public authorities and bodies established in that Member State.
- Depending on the legal system of the Member States, the rules on administrative fines may be applied in such a manner that the fines are imposed by competent national courts or by other bodies, as applicable in those Member States. The application of such rules in those Member States shall have an equivalent effect.
- The exercise of powers under this Article shall be subject to appropriate procedural safeguards in accordance with Union and national law, including effective judicial remedies and due process.
- Member States shall, on an annual basis, report to the Commission about the administrative fines they have issued during that year, in accordance with this Article, and about any related litigation or judicial proceedings.
Referenced Recitals:
Recital 143
Recital 143
In order to promote and protect innovation, it is important that the interests of SMEs, including start-ups, that are providers or deployers of AI systems are taken into particular account. To that end, Member States should develop initiatives, which are targeted at those operators, including on awareness raising and information communication. Member States should provide SMEs, including start-ups, that have a registered office or a branch in the Union, with priority access to the AI regulatory sandboxes provided that they fulfil the eligibility conditions and selection criteria and without precluding other providers and prospective providers to access the sandboxes provided the same conditions and criteria are fulfilled. Member States should utilise existing channels and where appropriate, establish new dedicated channels for communication with SMEs, including start-ups, deployers, other innovators and, as appropriate, local public authorities, to support SMEs throughout their development path by providing guidance and responding to queries about the implementation of this Regulation. Where appropriate, these channels should work together to create synergies and ensure homogeneity in their guidance to SMEs, including start-ups, and deployers. Additionally, Member States should facilitate the participation of SMEs and other relevant stakeholders in the standardisation development processes. Moreover, the specific interests and needs of providers that are SMEs, including start-ups, should be taken into account when notified bodies set conformity assessment fees. The Commission should regularly assess the certification and compliance costs for SMEs, including start-ups, through transparent consultations and should work with Member States to lower such costs. For example, translation costs related to mandatory documentation and communication with authorities may constitute a significant cost for providers and other operators, in particular those of a smaller scale. Member States should possibly ensure that one of the languages determined and accepted by them for relevant providers’ documentation and for communication with operators is one which is broadly understood by the largest possible number of cross-border deployers. In order to address the specific needs of SMEs, including start-ups, the Commission should provide standardised templates for the areas covered by this Regulation, upon request of the Board. Additionally, the Commission should complement Member States’ efforts by providing a single information platform with easy-to-use information with regards to this Regulation for all providers and deployers, by organising appropriate communication campaigns to raise awareness about the obligations arising from this Regulation, and by evaluating and promoting the convergence of best practices in public procurement procedures in relation to AI systems. Medium-sized enterprises which until recently qualified as small enterprises within the meaning of the Annex to Commission Recommendation 2003/361/EC should have access to those support measures, as those new medium-sized enterprises may sometimes lack the legal resources and training necessary to ensure proper understanding of, and compliance with, this Regulation.
Recital 168
Recital 168
Compliance with this Regulation should be enforceable by means of the imposition of penalties and other enforcement measures. Member States should take all necessary measures to ensure that the provisions of this Regulation are implemented, including by laying down effective, proportionate and dissuasive penalties for their infringement, and to respect the principle. In order to strengthen and harmonise administrative penalties for infringement of this Regulation, the upper limits for setting the administrative fines for certain specific infringements should be laid down. When assessing the amount of the fines, Member States should, in each individual case, take into account all relevant circumstances of the specific situation, with due regard in particular to the nature, gravity and duration of the infringement and of its consequences and to the size of the provider, in particular if the provider is an SME, including a start-up. The European Data Protection Supervisor should have the power to impose fines on Union institutions, agencies and bodies falling within the scope of this Regulation.
Recital 169
Recital 169
Compliance with the obligations on providers of general-purpose AI models imposed under this Regulation should be enforceable, inter alia, by means of fines. To that end, appropriate levels of fines should also be laid down for infringement of those obligations, including the failure to comply with measures requested by the Commission in accordance with this Regulation, subject to appropriate limitation periods in accordance with the principle of proportionality. All decisions taken by the Commission under this Regulation are subject to review by the Court of Justice of the European Union in accordance with the TFEU, including the unlimited jurisdiction of the Court of Justice with regard to penalties pursuant to Article 261 TFEU.