EU Council and Parliament Agree to Simplify AI Act — Deadlines Shifted, SME/SMC Exemptions Expanded

Summary

On May 7, 2026, the Council and Parliament reached a provisional political agreement on simplifying the EU AI Act. The package postpones the deadline for establishing national AI regulatory sandboxes until 2 August 2027, reduces the grace period for synthetic-content transparency from six months to three months (new deadline 2 December 2026), and extends SME exemptions to "small mid-caps" (SMCs). It also expands the lawful basis for processing sensitive personal data for bias detection and mitig