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What Is the EU AI Act and Why Does It Matter?

The EU AI Act (AI Act) aims to establish a common regulatory and legal framework for the development and use of AI in the EU.

UK Companies / Companies based outside the EU could be affected in several ways, for example, if their website offers a chatbot function in the EU, they could be caught by the transparency obligations.

Latest Changes to the EU AI Act: Key Updates for Businesses

On 19th November 2025, the European Commission announced proposed changes to the AI Act, following their commitment to a “clear, simple, and innovation-friendly implementation of the AI Act.” These changes are seen in the Digital Omnibus on AI Regulation Proposal – Digital Omnibus on AI

  • Extended timeline – Article 113 – Currently, the rules on high-risk AI systems are due to apply from 2 August 2026. Under the draft, compliance will take effect 6–12 months after new standards are approved or support tools have been put in place, or by 2 December 2027 (Annex III systems) and 2 August 2028 (Annex I systems).
    • Impact on business – no rush towards implementation.
  • Registration requirement reduced – Article 6 – If providers document that an AI system is not high-risk, they no longer need to register it in the EU public database. Companies must still document their decisions and retain these records for potential regulatory scrutiny.
    • Impact on business – reduced administrative burden but tightens internal risk assessment.
  • Broader real-world testing – Article 60 – is broadened which allows controlled pre-market, real-world testing of Annex I high-risk AI systems, e.g. medical devices and radio equipment.
    • Impact on business – Gives business greater flexibility to run controlled live trials before full certification, subject to safeguards.
  • Proportionality for small mid-cap (SMC) enterprises– Article 99 – The change extends the AI Act’s SME flexibilities to SMCs: an enterprise which employs fewer than 750 people and which has an annual turnover not exceeding EUR 150m or an annual balance sheet total not exceeding EUR 129m.
    • Impact on business – This expansion would give SMCs significantly lower potential fines and a lighter compliance load, reducing regulatory friction and costs as they build or deploy AI. In practice, it creates a more supportive environment for scaling AI-driven products and services within the EU.
  • Bias Detection – Article 10 – the proposal extends to providers and deployers of all AI systems and models (not just high-risk) who will be allowed to process special category personal data for the purpose of ensuring bias detection and correction, subject to appropriate safeguards.
    • Impact on business – Businesses can more effectively detect and correct bias, leading to fairer, more reliable AI systems.

Penalties for Non-Compliance with the EU AI Act

The highest tier of penalties allows for fines up to the higher of EUR35 million or 7% of global annual turnover

How can we help?

  1. Review and draft contracts and policies: Ensuring compliance with the proposed changes of the EU AI Act.
  2. Risk assessments: Identifying gaps in existing contractual agreements.
  3. Regulatory updates: Keeping your business up to date with evolving EU regulations

Reach out to Andrew Gordon if you’d like to discuss any of the above options.