EU AI Act: What Accountants and Small Businesses Need to Know
The EU AI Act, effective August 2024, is rolling out in stages until 2028. Its goal is to ensure AI systems do not risk health, safety, or fundamental rights across the EU.
BRUSSELS – The European Union's Artificial Intelligence Act (AI Act) entered into force on August 1, 2024, with its provisions being implemented in phases through 2028. The regulation aims to ensure that AI systems used within the EU do not jeopardize health, safety, or fundamental rights.
A significant milestone was reached in August 2025, when the first major obligations took effect for businesses, public authorities, and AI solution providers. While the law established a unified framework across the EU in February 2025, the focus shifted in August 2025 towards penalties for non-compliance, requirements for general-purpose AI models (GPAI), and supervision at national and EU levels.
Prohibitions on certain AI uses, such as social scoring systems and predicting criminal behavior based on personality traits, became effective in February 2025. Employers are now required to ensure their staff possess adequate AI literacy. Failure to comply can result in fines of up to €35 million or 7% of global turnover.
The AI Act's rollout continues with rules for general-purpose AI models taking effect in August 2025. These models, including generative AI like ChatGPT, must now provide technical documentation and publish summaries of their training data. High-risk AI systems, those with potential for significant harm in areas like healthcare or recruitment, face stricter requirements starting broadly in August 2026.
In November 2025, the European Commission proposed a "Digital Omnibus" regulation to streamline and consolidate digital rules, which may impact the implementation timelines. The act also mandates that Member States establish regulatory sandboxes to help SMEs test AI solutions.