# AI tells a French startup deploying a high-risk AI system that non-compliance fines under the EU AI Act are capped at 2% of annual turnover

- **ID:** `legal/france-ai-act-penalty-misestimate`
- **Domain:** legal
- **Category:** legal_risk
- **Error Code:** `AI-Act-Penalty-2024`
- **Verification:** ai_generated
- **Fix Rate:** 85%

## Root Cause

The EU AI Act sets tiered penalties: up to 35 million EUR or 7% of global annual turnover for prohibited practices, 15 million EUR or 3% for most non-compliance, and 7.5 million EUR or 1.5% for incorrect info; the 2% figure is a common misquote.

## Version Compatibility

| Version | Status | Introduced | Deprecated |
|---------|--------|------------|------------|
| EU AI Act Regulation 2024/1689 | active | — | — |
| CNIL guidance 2024 | active | — | — |

## Workarounds

1. **Conduct a full AI system classification per Annex III of the AI Act. If high-risk, implement risk management, data governance, and transparency obligations. Document compliance.** (80% success)
   ```
   Conduct a full AI system classification per Annex III of the AI Act. If high-risk, implement risk management, data governance, and transparency obligations. Document compliance.
   ```
2. **If the system is not high-risk, obtain a self-declaration and register in the EU database. Example: use the EU AI compliance checklist from the Commission.** (90% success)
   ```
   If the system is not high-risk, obtain a self-declaration and register in the EU database. Example: use the EU AI compliance checklist from the Commission.
   ```
3. **Engage a notified body for conformity assessment if required (e.g., for biometric categorization). Budget 50k-150k EUR for the process.** (75% success)
   ```
   Engage a notified body for conformity assessment if required (e.g., for biometric categorization). Budget 50k-150k EUR for the process.
   ```

## Dead Ends

- **** — Assuming the 2% figure from GDPR applies; the AI Act has different tiers and higher maximums. (80% fail)
- **** — Thinking that startups with <50 employees are exempt; the AI Act applies to all deployers of high-risk systems regardless of size. (65% fail)
- **** — Believing that fines are only based on EU turnover; they are based on global annual turnover. (70% fail)