President Roberta Metsola said his gesture had "damaged the dignity and reputation" of the Parliament.
A Bulgarian nationalist MEP has been sanctioned for making an apparent Nazi salute at the European Parliament in February.
Angel Dzhambazki will have his daily subsidy allowance suspended for six days -- equivalent to €2,028.
European Parliament President Roberta Metsola announced the fine at the opening plenary session in Strasbourg on Tuesday.
"I have decided to impose a penalty on Angel Dzhambazki for his inappropriate behaviour on 16 February 2022, when he held out his right arm in what was perceived as a Nazi salute as he left the chamber," Metsola said.
"This has damaged the dignity and reputation of the European Parliament," she continued.
The Bulgarian MEP has been informed of the sanction and had the possibility to appeal, Metsola added.
Amid outrage over the apparent gesture, Dzhambazki had denied the allegations and said it was an "innocent wave".
"I apologise if my innocent wave (which actually was meant as an excuse) has insulted anyone," he said.
Video footage showed him walking up the steps of the parliament after speaking in a debate before he turned around and holding his right arm out in front of him with his hand flat a few seconds before leaving.
The debate had been held over the rule of law and the EU Commission's decision to cut funds to countries that fail to comply with EU values and principles.
Dzhambazki had slammed the decision and accused the bloc of trying to "shame" Hungary and Poland.
The European Parliament's rules of procedure state that MEPs "shall refrain from any inappropriate behaviour" and "any offensive remarks".
