The General Data Protection Regulation: Achieving Compliance for EU and Non-EU Companies

By Karaduman, Ozan | Business Law International, September 2017 | Go to article overview

The General Data Protection Regulation: Achieving Compliance for EU and Non-EU Companies


Karaduman, Ozan, Business Law International


The European Union (EU) has introduced new legislation on the protection of personal data: the General Data Protection Regulation (GDPR). The GDPR was adopted on 27 April 2016 and it will come into force on 25 May 2018 after a two-year transition period.

Businesses in the EU are readjusting their processing activities in order to ensure compliance with the GDPR. However, it is not only EU businesses that should be working towards compliance, but also some non-EU businesses because of the expanded territorial scope of the GDPR.

Expanded territorial scope of the GDPR

Article 3 of the GDPR sets forth that data controllers and data processors that are not established in the EU will be subject to the GDPR if processing is related to: (1) the offering of goods or services to data subjects in the EU (even if no payment is required for such goods or services); or (2) monitoring the behaviour of the data subjects provided that such behaviour takes place in the EU.

There is no straightforward explanation as to what would count as offering goods or services as regards Article 3 of the GDPR. According to Recital 23, a case-by-case analysis must be made in order to determine whether an activity can be regarded as 'offering of goods or services' in terms of Article 3. The important point is to understand whether or not the data controller or the processor contemplates or intends to offer goods or services in the EU. This is not an issue easy to determine. A combination of facts should show that the relevant controller or processor contemplates to offer goods or services to individuals in the EU. A good example is electronic commerce: websites operated by data controllers in non-EU countries are accessible by individuals in the EU. However, the accessibility of such websites in and of itself does not mean that the relevant controller contemplates offering services to individuals in the EU. Other features of the website (eg, the languages used, the possibility of sending goods to the EU and whether or not the website accepts users from abroad) must be taken into consideration in order to come to a conclusion that the relevant website owner/operator falls under the scope of the GDPR. For example, if a Turkish electronic commerce company targets Turkish-speaking data subjects residing in the EU (eg, Germany) and its website is only written in the Turkish language, then that company will fall under the scope of the GDPR even if the Turkish language is not one of the official languages of any of the Member States of the EU.

Another important point regarding territorial scope is that if a data controller or data processor is established in the EU, it will directly fall under the scope of the GDPR even if the processing activity does not take place in the EU. This is important for companies that have subsidiaries in the EU. If those subsidiaries can be regarded as a data controller or data processor, then they will be subject to the GDPR, even if their data processing activity takes place outside the EU. For example, if a group of companies has an affiliate in the EU but that affiliate keeps personal data in group servers that are located outside the EU, it will still have to comply with the GDPR rules.

This shows how important it is for data controllers or data processors to make a self-evaluation of whether or not they fall under the scope of the GDPR. The biggest mistake a company that is not specifically within the EU could make would be to think itself outside the application scope of the GDPR.

What are the important rules that a company falling under the scope of the GDPR must comply with? The following sections briefly respond to this question.

Appointment of a representative

A data controller or data processor must appoint a representative in the EU if the processing is related to: (1) the offering of goods or services to data subjects in the EU (even if no payment is required for such goods or services); or (2) monitoring the behaviour of data subjects provided that such behaviour takes place in the EU. …

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