What is KlarvoEngine?

KlarvoEngine is Klarvo's regulatory intelligence engine. It analyses your AI system through a 3-pass classification pipeline and produces an article-cited compliance memo with obligations, deadlines, and recommended controls — in under 60 seconds.

What is the EU AI Act?

The EU AI Act (Regulation 2024/1689) is the world's first comprehensive AI regulation. It classifies AI systems by risk level and imposes obligations on providers and deployers of AI systems operating in the EU.

Any organisation that provides or deploys AI systems affecting people in the EU — regardless of where the organisation is based. This includes websites with AI chatbots, companies using AI analytics, and businesses integrating AI models into their products.

Prohibited AI practices have been enforceable since February 2025. GPAI model obligations since August 2025. Article 50 transparency and most remaining obligations apply from August 2, 2026.

What are the penalties?

Up to €35 million or 7% of global turnover for prohibited practices. Up to €15 million or 3% for transparency and other violations. For SMEs, the penalty is whichever amount is lower.

Do SMEs have to comply with the EU AI Act?

Yes. The Act does not exempt SMEs from substantive requirements. However, it provides reduced penalties, regulatory sandbox access, and simplified processes.

Am I a provider or a deployer?

You're a deployer if you use AI tools under your authority. You're a provider if you develop AI or integrate AI models via API into your own product. Most SMEs are deployers.

What if I just use ChatGPT or similar tools?

If you use them internally, you're a deployer with minimal obligations. If you integrate them into customer-facing products via API, you're likely the provider of the resulting system.

Overview Article 50 Transparency Prohibited Practices High-Risk AI Systems Guide for SMEs Enforcement Timeline

BUILT FOR SMES

EU AI Act compliance without the enterprise price tag.

KlarvoEngine gives you the same regulatory intelligence that large enterprises get from consultants — for €0 to start. Free: 1 system. Starter €149/mo: 10 systems. Growth €349/mo: 25 systems. All include full KlarvoEngine classification.

Your AI tools are probably already classified

AI Tool	Risk Level	What You Need to Do
Website chatbot (ChatGPT, Tidio, Intercom)	Limited	Disclose AI interaction (Article 50)
AI content generation	Limited	Mark and label AI-generated content
AI email marketing	Minimal	No specific AI Act obligations
AI analytics (GA4, Hotjar, Clarity)	Minimal	No specific AI Act obligations
AI translation tools	Minimal	No specific AI Act obligations
AI image compression	Minimal	No specific AI Act obligations
AI accessibility overlays	Limited	Disclose AI interaction
AI spam filtering	Minimal	No specific AI Act obligations
AI HR screening / CV filtering	High-risk	Full Annex III compliance
AI credit scoring	High-risk	Full Annex III compliance + FRIA

Prioritised compliance checklist

Do now (already required)

1Stop all prohibited AI practices — screen yours free →

2Implement AI literacy training for staff using AI

3Create a complete AI system inventory — start free →

4Classify each system against Annex III categories

5Verify your AI vendors' compliance with GPAI obligations

By August 2, 2026

Implement Article 50 transparency — chatbot notices, content labels — install AI Transparency

Prepare FRIA if required (public bodies, credit/insurance deployers)

Establish human oversight processes for high-risk AI

Set up incident monitoring and reporting

Update vendor contracts to require compliance documentation

By December 2027 (if Omnibus adopted)

Full high-risk deployer compliance

Worker notification for employment AI

EU database registration (public authority deployers)

SME support and exemptions

The Act doesn't exempt SMEs from substantive requirements, but provides significant support:

Reduced penalties — SMEs pay whichever is lower (not higher) between the fixed amount and the percentage of turnover

Regulatory sandboxes (Articles 57-62) — priority access for SMEs, free of charge, with compliance documentation credit

Simplified quality management — microenterprises (under 10 employees) can use simplified QMS. The Digital Omnibus proposes extending this to all SMEs

Reduced conformity assessment fees — proportionate to size

Standardised templates — the Commission will provide templates (still pending)

Provider vs Deployer — which are you?

You're a deployer if you use AI tools under your authority. Most SMEs are deployers. You use ChatGPT, Tidio, Rank Math, Mailchimp — these are AI systems you deploy.

You're a provider if you develop an AI system or put one on the market under your own name. Critically: if you integrate an AI model (GPT-4, Claude, Gemini) via API into your own product, you're the provider of the resulting AI system. This is the most commonly missed classification for tech SMEs.

You become a provider (even as a deployer) if you: put your name/trademark on an AI system, make a substantial modification, or change its intended purpose to make it high-risk.

Both roles carry separate obligations. Provider obligations are heavier.

How much does compliance cost?

Limited/minimal risk AI (most SMEs)

€0–500 — AI inventory, classification, and Article 50 transparency (Klarvo free plan covers this)
€500–2,000 — Custom transparency implementations or vendor audits
€0 — Ongoing, if using automated tools like Klarvo

High-risk AI

€200,000–€500,000 — Initial compliance implementation
€70,000–€150,000/year — Ongoing QMS, monitoring, documentation

Cost reduction: joining SME consortia (25-40% savings), using regulatory sandboxes, reusing compliance infrastructure across systems.

Built for SMEs

Klarvo is built for SMEs. KlarvoEngine classifies your first system free — no consultants, no enterprise contracts.

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