In today’s digital economy, data is one of the most valuable assets of any business. Companies increasingly rely on cloud storage, international service providers, and cross-border data processing to operate efficiently. However, these practices raise significant legal questions under the General Data Protection Regulation (GDPR) and national data protection law. Businesses must understand the rules on data localisation and international transfers to avoid financial penalties and reputational damage.
Data localisation requirements under Romanian and EU law
Unlike some jurisdictions that impose strict “data residency” rules, the European Union does not generally require companies to keep all personal data within national borders. However, the GDPR establishes a clear principle: personal data must remain within the European Economic Area (EEA) unless specific safeguards are in place.
In Romania, the National Supervisory Authority for Personal Data Processing (ANSPDCP) enforces these rules. Companies may store and process data anywhere within the EU, provided they comply with security, confidentiality, and accountability requirements. Problems arise when businesses transfer data to servers outside the EEA; for example, when using U.S.-based or other non-EU cloud providers.
Legal framework for cross-border data transfers
When personal data leaves the EEA, the GDPR requires one of the following safeguards:
- Adequacy decisions: Transfers are permitted if the European Commission has determined that the destination country ensures an adequate level of data protection. Examples include the UK, Japan, and Switzerland.
- Standard Contractual Clauses (SCCs): These are contractual commitments approved by the European Commission that bind foreign service providers to EU-level data protection standards.
- Binding Corporate Rules (BCRs): Multinational groups of companies can adopt internal policies, approved by data protection authorities, to allow intra-group transfers of personal data.
If none of these mechanisms apply, transfers are only possible under limited derogations, such as explicit consent from the data subject or necessity for contractual performance.
The role of cloud services and foreign providers
One of the most common compliance challenges for businesses involves cloud storage and SaaS platforms. Many international providers are headquartered outside the EU but operate data centres inside the EEA. Companies must carefully review their provider’s terms to ensure that personal data does not leave the EU without valid safeguards.
Following the Schrems II judgment of the Court of Justice of the EU, transfers to the United States require additional due diligence, even when using SCCs. Romanian companies must assess whether U.S. laws, particularly on government access to data, compromise the protection level guaranteed by GDPR.
Compliance strategies for Romanian companies regarding data localisation and cross-border data transfers
To reduce risk, companies operating in Romania should adopt a structured compliance framework for data localisation and transfers. This includes mapping all data flows, identifying when data leaves the EEA, and verifying that appropriate safeguards are in place. Contracts with cloud providers should be carefully reviewed to ensure they include GDPR-compliant transfer mechanisms and allow businesses to demonstrate accountability in case of regulatory scrutiny.
When assessing international transfers, businesses should document their risk analysis and maintain updated policies for cross-border data handling. This documentation is essential in case of an ANSPDCP investigation or a complaint from a data subject.
Enforcement and penalties in Romania
The Romanian data protection authority has become more active in monitoring cross-border data transfers, particularly in sectors that heavily rely on cloud storage and digital services. Failure to comply with GDPR rules on international transfers can result in fines of up to €20 million or 4% of global annual turnover, whichever is higher. Beyond financial penalties, unlawful transfers may trigger reputational harm and undermine customer trust.
How to strengthen compliance in a digital economy
Data localisation and cross-border transfer compliance are no longer niche issues, they are central to business continuity in digital economy. Companies must ensure that personal data remains secure, that transfers outside the EEA are properly safeguarded, and that their internal policies reflect the latest GDPR and EU case law. By adopting robust contractual safeguards and proactive compliance measures, businesses can reduce legal risk, maintain customer trust, and confidently use international service providers.