Table of Contents
Author | Lucía Burbano
The EU Artificial Intelligence Act is the first comprehensive regulation to govern this technology through an AI governance framework. Its aim is to ensure safety, protect fundamental rights and promote the deployment of human-centric AI, while also strengthening adoption, investment and innovation across the European Union.
For cities, the Act will have a direct impact on the way they operate, as local governments are regarded not only as users of AI systems but, in some cases, also as developers or procurers of those systems. The regulation introduces new requirements for AI governance, transparency and risk management for municipalities.
What is the EU AI Act and who does it apply to?
The EU AI Act is groundbreaking legislation that will transform AI governance. It recognizes the potential and benefits that AI systems and models can deliver to society, the economy and innovation. At the same time, it acknowledges the need for a robust legal framework to prevent risks relating to safety, fundamental rights and systemic impacts.
The EU AI Act classifies these risks into four categories.
Unacceptable risk
These are AI systems considered a threat to fundamental rights. One example relevant to cities is the use of real-time biometric identification in public spaces.
High risk
These are systems that may have a significant impact on people’s lives, safety or rights and therefore require strict controls, documentation and human oversight. In an urban context, an example would be a local authority using an algorithm to assess applications for social benefits or public housing.
Limited transparency risk
These are systems that interact directly with people and must therefore meet transparency requirements. For example, municipal chatbots must clearly inform users that they are interacting with an AI system.
Minimal or no risk
These are low-impact AI applications that can be used freely, such as email spam filters, music recommendation systems or AI tools that help organize photographs.
Who does this Act apply to?
The Act has a broad scope and applies to both public and private organizations, whether based inside or outside the EU, provided that the AI system is placed on the market or used within the European Union.
For example, a company using AI to screen job applications, a local government using AI to process applications for public assistance, or a hospital relying on AI-powered diagnostic algorithms may all be subject to specific obligations under the EU AI Act.
The Act is being implemented gradually. The prohibitions on certain AI practices and AI literacy requirements came into force in February 2025, followed by the rules governing general-purpose AI models in August 2025. From August 2026, the obligations for high-risk AI systems and transparency requirements begin to apply. The Regulation will be fully applicable from August 2027.
How does the EU AI Act influence the deployment of municipal technologies?
The EU AI Act is likely to shape the deployment of urban technologies by requiring local governments to assess, manage and oversee the use of AI systems before they are introduced into public services.
Additional requirements
These requirements change the way smart city projects are designed. Until now, many cities have adopted new technologies primarily on the basis of efficiency gains or cost savings. Under the new framework, they must also consider factors such as the AI system’s level of risk, its potential impact on citizens and the possibility of bias or discrimination.
For example, an AI system that optimizes traffic signals will be subject to fewer requirements than one used to determine which families receive priority access to social assistance.
Digital public services will also be affected, as many already rely on AI across citizen service channels, including the management of urban incidents, the optimization of energy use in public buildings, traffic forecasting and digital twins.
Transparency
Citizens must be informed whenever they are interacting with an AI system, whether it is a virtual assistant or a generative AI tool that produces responses or reports. In addition, decisions with significant consequences cannot be fully automated and must involve meaningful human oversight.
Impact on public procurement
Local governments will need to require technology providers to demonstrate compliance with the EU AI Act. This will affect public tenders involving smart mobility, urban safety, waste management and energy efficiency.
Much like the EU General Data Protection Regulation, compliance with the EU AI Act will become a key legal requirement.
Requires AI governance frameworks
Municipal governments will be required to maintain an inventory of AI systems, develop risk assessment protocols, conduct regular audits and compliance checks, and provide public sector employees with training on AI and the requirements set out in the Regulation.
Several European cities are already developing dedicated AI governance frameworks. Barcelona has approved a municipal AI strategy for 2026–2028 focused on governance, transparency, risk management and the responsible reuse of AI systems. Meanwhile, Bologna and Milan have published guidelines for the use of AI in administrative processes and public services.
Q&A: How the EU AI Act defines the deployment of municipal technologies
What is the main objective of the EU AI Act?
To regulate the use of artificial intelligence in order to ensure safety, protect fundamental rights and promote human-centric AI.
Which AI systems are considered high risk for local governments?
Those that could affect fundamental rights or essential public services, such as systems used to manage applications for social benefits or public housing.How does the Act affect smart city projects?
It requires local governments to assess risks, evaluate the potential impact on citizens, identify possible bias and establish appropriate oversight mechanisms before deploying AI solutions.What transparency requirements does the Act introduce?
Citizens must be informed whenever they are interacting with an AI system, and decisions with significant consequences cannot be made solely through automated processes.What new obligations will local governments have?
They will need to maintain an inventory of AI systems, conduct risk assessments, audit the use of AI and provide AI training for public sector employees.
Images | ismagilov/iStock, Javier Sancho de Altube/iStock, StockByM/iStock
