Yes, an EU business can use software from a US company and still comply with GDPR, but an EU hosting region alone is not enough. You must classify the data, map every transfer (including backups, support access, telemetry and subprocessors), select a valid GDPR Chapter V transfer mechanism, sign a controller–processor agreement and restrict access with technical and organisational controls.
The EU–U.S. Data Privacy Framework (DPF) can provide an Article 45 adequacy route for transfers to a participating US organisation and covered services. It does not make the software “GDPR compliant” by itself. If the DPF does not cover the relevant legal entity, service or data flow, document another safeguard—often Standard Contractual Clauses (SCCs)—and the associated risk assessment.
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What “EU data residency” actually requires
EU data residency is not a single GDPR rule requiring every byte of information to remain inside the European Union. GDPR obligations depend on the data, the processing activity, the parties and the destination of any transfer. A service may store production records in an EU region while allowing a US-based engineer to view a support ticket, sending diagnostic logs to another country or replicating backups outside the EU. Each of those paths can matter.
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The practical objective is to show, with evidence, where personal data goes, why it goes there, who can access it and which legal safeguard permits the transfer. The same analysis should cover confidential business information even when it is not personal data, because contractual confidentiality and security commitments may be stricter than GDPR.
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No universal “must stay in Europe” percentage
Primary EU and US regulatory materials do not establish a universal percentage of an organisation’s data that must remain in Europe. They describe transfer mechanisms and obligations, not a single residency quota. Your regulator, contract, sector rule or customer agreement may impose additional location requirements, so treat those as separate constraints rather than assuming GDPR creates a blanket storage mandate.
Storage location is only one control
Ask five separate location questions:
- Where is the live database stored and processed?
- Where are backups, snapshots and disaster-recovery replicas kept?
- From which countries can vendor staff or subcontractors administer or support the service?
- Where are telemetry, crash reports, analytics and security logs sent?
- Where can data go when you export it, integrate it or terminate the account?
An “EU region” answer that addresses only the first question leaves the other transfer paths unresolved.
How the EU–U.S. Data Privacy Framework fits
On 10 July 2023, the European Commission adopted an adequacy decision for the EU–U.S. Data Privacy Framework. On that basis, personal data may flow from the EU to US companies that participate in the framework, subject to the decision’s conditions and the scope of the company’s certification.
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The DPF’s official FAQ describes the framework as a GDPR Article 45 transfer mechanism. It also gives an important warning: “It is important to note that the EU-U.S. DPF is not a GDPR compliance mechanism, but rather is a mechanism that enables participating organizations to meet the EU requirements for transferring personal data to third countries.” In other words, certification can solve a transfer-law question; it does not replace lawful processing, transparency, security, retention or data-subject-rights duties.
Verify the exact certification
Before relying on the DPF, check the current official listing rather than a vendor’s undated marketing statement. Confirm:
- The legal entity named in your contract is the entity that is certified.
- The certification is active, not expired, withdrawn or limited to a different affiliate.
- The specific service or product you use is included in the certification’s scope.
- The relevant data types and purposes fall within the organisation’s stated coverage.
- Any onward transfer to a processor is handled under the required contractual terms.
Save a dated copy or record of the listing and the covered services in your vendor file. Recheck it at renewal and after a material change to the service.
Certification does not remove GDPR’s other rules
The EU implementing decision allows transfers to certified US organisations without additional authorisation under the adequacy route. GDPR still applies whenever its territorial-scope conditions are met. You still need a lawful basis for processing, privacy information, appropriate security, retention controls and procedures for access, deletion and other data-subject requests.
When SCCs, a transfer-impact assessment or another safeguard is needed
If the DPF does not cover the flow, identify the applicable GDPR Chapter V safeguard. Standard Contractual Clauses are a common route, but the contract alone is not the whole assessment. You must examine the actual destinations, access patterns, technical measures and relevant law, then document why the chosen safeguard provides an adequate level of protection.
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Use a transfer decision for each material flow
| Situation | What to check | Action to document |
|---|---|---|
| The US legal entity and service are currently DPF-certified | Certification scope, covered services, purpose and onward processors | Record the Article 45 basis and retain evidence of the listing |
| The vendor is not certified, or the service is outside the certification | Destination countries, SCC module, supplementary measures and government-access risk | Execute the relevant SCCs and record the transfer-impact assessment |
| Data goes to a non-US country through a subprocessor | That country’s transfer mechanism and the vendor’s onward-transfer terms | Map and assess the subprocessor separately |
| Only anonymised information leaves the EU | Whether the transformation prevents re-identification using reasonably available means | Document the anonymisation method and residual risk |
| No personal data is sent, but confidential business data is | Contractual location, confidentiality, access and security requirements | Apply the organisation’s information-classification and vendor-risk controls |
A transfer-impact assessment should be specific to the service. Describe the data categories, subjects, purposes, destinations, recipients, access methods, applicable law and supplementary controls. Do not reuse a generic assessment that ignores support access or telemetry.
Schrems II remains part of the background
On 16 July 2020, the Court of Justice of the European Union invalidated the former EU–US Privacy Shield decision and required safeguards that address concerns about US government access. The later DPF adequacy decision reflects that legal background. Keep your assessment current when court decisions, regulatory guidance or the service’s access model changes.
A practical implementation sequence
Use the following sequence for a new US software purchase or an existing service that has not had a complete residency review.
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1. Classify the information before choosing settings
Make an inventory of what users will enter, upload, generate or expose through integrations. Separate:
- Personal data, including identifiers, contact details, account records and online identifiers.
- Special-category data, such as health, biometric, racial or ethnic, political, religious or trade-union information.
- Confidential business information, intellectual property and regulated records.
- Data that can be anonymised, pseudonymised, aggregated or kept entirely outside the product.
Decide whether the service needs the original value. For example, a reporting tool may need totals rather than names, and a support platform may need a ticket number rather than a full customer record. Reducing the data sent is usually more durable than relying on a vendor promise about location.
2. Map every flow, not just the primary database
Create a data-flow record for each feature and integration. Include:
- Collection point and purpose.
- Production processing and storage region.
- Backups, snapshots, disaster recovery and deletion schedules.
- Support tickets, screen sharing, remote diagnostics and administrator access.
- Telemetry, crash reports, usage analytics and security monitoring.
- Subprocessors, their countries and the functions they perform.
- Exports, APIs, email notifications, connected storage and downstream systems.
Ask the vendor for a current subprocessor list, data-location description, support-access policy, retention schedule and government-request process. Treat an answer such as “data stays in Europe” as incomplete unless it addresses these paths.
3. Identify the transfer route
For each destination, record whether the transfer relies on an adequacy decision, the DPF, SCCs or another Chapter V mechanism. If relying on the DPF, verify the legal entity and service scope at the time of contracting. If relying on SCCs, identify the applicable module, the parties, onward transfers and supplementary measures. Where no mechanism covers a flow, stop that flow, redesign it or obtain specialist advice before production use.
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4. Contract the processing
Put a GDPR Article 28 controller–processor agreement in place where the vendor processes personal data on your behalf. The agreement should state:
- Your documented instructions, purposes and data categories.
- Confidentiality obligations for authorised personnel.
- Technical and organisational security measures.
- Assistance with access, correction, deletion, restriction and other data-subject requests.
- Support for breach notification, impact assessments and regulator enquiries.
- Rules for appointing and changing subprocessors, with notice and an objection process where applicable.
- Return or deletion of data at the end of the service, including copies in backups where technically feasible.
- Audit information, independent assurance reports and reasonable verification rights.
- Onward-transfer conditions and the contract required when EU data is sent to another processor.
The DPF onward-transfer principle requires a contract when EU personal data is transferred to a processor for processing, whether or not that processor participates in the DPF. The contract must cover instructions, technical and organisational measures and conditions for onward transfers.
5. Limit access technically
Configure the service so that only the people and systems that need data can reach it.
- Use least-privilege roles and separate administrator accounts.
- Require strong authentication and, where available, phishing-resistant multi-factor authentication.
- Choose EU-based support or administration options when the provider offers them, and require approval for exceptional access.
- Use customer-managed encryption keys or an equivalent control when the service supports it; understand who can access keys and how recovery works.
- Enable detailed audit logging and review administrator, export and sharing events.
- Disable optional telemetry that is not needed for the service.
- Set the shortest practical retention period and configure automatic deletion.
- Restrict integrations and exports to approved destinations.
These controls reduce exposure; they do not change the legal destination of a transfer. Record the settings and review them after upgrades or changes to the vendor’s default configuration.
6. Test deletion, export and incident processes
Before relying on a service, perform a controlled export and deletion test. Confirm what is deleted immediately, what remains in backups, how long residual copies persist and how you receive evidence. Test your process for a data-subject request and for a security incident involving vendor access. A contractual promise that cannot be operationally verified is a weak control.
7. Reassess continuously
Set review triggers for contract renewal, a new subprocessor, a new region, a change in support model, a new telemetry feature, a security incident, a change in DPF certification or a significant legal development. The European Data Protection Board’s business FAQ version 2.0 was published on 23 January 2026; use the current edition when updating practical guidance and internal procedures.
How to compare US software options
Use a weighted scorecard rather than selecting a product solely because it advertises an EU region.
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1Clear out junk files and repair common Windows errors2Scan for outdated or missing drivers - takes under a minute3Repair Windows errors before they cause bigger problems| Decision axis | Questions for the vendor | Evidence to retain |
|---|---|---|
| Transfer basis | Is the legal entity and service covered by the DPF? If not, which SCCs or other Chapter V route applies? | Certification record, signed clauses and transfer-impact assessment |
| Geography | Where are processing, backups and disaster-recovery copies located? | Region map, service description and backup policy |
| Human access | Which teams can administer or support the service, from which countries and under what approvals? | Access policy, role model and access logs |
| Subprocessors | Who receives data, for what purpose and with what change-notice period? | Current subprocessor list and notices |
| Provider transparency | How are government requests, incidents and material service changes handled? | Request process, breach terms and notification commitments |
| Customer control | Can you control keys, retention, exports, deletion and optional telemetry? | Configuration record and test results |
| Operational fit | Does the service provide required features, acceptable latency and support coverage without creating avoidable transfers? | Requirements matrix and approved architecture |
A service with fewer features may be the better compliance choice if it allows you to eliminate a high-risk integration or retain control of encryption keys. Conversely, an EU-hosted option may still require a transfer assessment if non-EU support or subprocessors can access personal data.
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Common failure modes and fixes
“The data is in an EU region, so we are done.”
Why it fails: Support staff, telemetry, backups or subprocessors may still receive data elsewhere.
Fix: Obtain a complete flow map, restrict non-EU access, disable unnecessary diagnostics and assess every destination.
“The vendor is DPF-certified, so the product is GDPR compliant.”
Why it fails: DPF certification is a transfer mechanism, not a complete GDPR compliance program.
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“We signed SCCs once and never need to revisit them.”
Why it fails: A new subprocessor, region or support arrangement can create a different transfer path or risk profile.
Fix: Tie reassessment to renewals and material changes, and maintain a current transfer register.
“Telemetry is not production data.”
Why it fails: Diagnostic payloads can contain identifiers, content fragments, IP addresses or account information.
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“A vendor’s standard DPA covers every concern.”
Why it fails: Standard terms may omit your actual retention needs, approval process, audit evidence or high-risk support scenario.
Fix: Check each Article 28 requirement against the service configuration and negotiate additions where the risk warrants them.
“We can move the data later if a regulator asks.”
Why it fails: Migration may be difficult when exports are incomplete, backups cannot be isolated or integrations have copied data to other systems.
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What regulators’ cloud investigations signal
The European Data Protection Supervisor’s annual report describes investigations of cloud use by EU institutions involving major providers, including Microsoft and Amazon Web Services. The focus included GDPR Chapter V compliance when data is transferred to non-EU countries, including the United States. The lesson for private organisations is practical: institution-grade procurement also examines access, onward transfers and contractual safeguards rather than treating cloud location as a complete answer.
A review checklist for procurement and renewals
- Have we listed every personal-data category and identified any special-category data?
- Can the product operate with anonymised, pseudonymised or reduced data?
- Are production, backup and disaster-recovery locations documented?
- Have we included support access, telemetry, logs, exports and integrations?
- Is each destination covered by an identified Chapter V mechanism?
- If relying on the DPF, did we verify the current legal entity and service scope?
- If relying on SCCs, did we complete and record a service-specific transfer-impact assessment?
- Is the Article 28 controller–processor agreement complete, including onward-transfer terms?
- Are least privilege, strong authentication, logging, retention and deletion configured?
- Can we obtain subprocessor, government-request, incident and audit information?
- Have we tested export, deletion and recovery from a vendor incident?
- Is there an owner and review date for certification, subprocessors, regions and legal changes?
Bottom line for finance teams and other data owners
Choose US software on the basis of the complete data path, not the vendor’s headquarters or a regional hosting label. An EU region can reduce exposure and simplify architecture, while DPF certification can provide an Article 45 transfer route for a covered US organisation. Neither replaces a data inventory, an Article 28 contract, a transfer assessment where required, or controls over support, telemetry, subprocessors and retention.
Document the decision, preserve the evidence you relied on and schedule a reassessment. That approach lets you keep useful US software while making your EU data-protection position understandable, testable and maintainable.
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