Article 3 GDPR

← Article 3: Territorial scope →
Chapter 1: General provisions Article 1: Subject-matter and objectives Article 2: Material scope Article 3: Territorial scope Article 4: Definitions Chapter 2: Principles Article 5: Principles relating to processing of personal data Article 6: Lawfulness of processing Article 7: Conditions for consent Article 8: Conditions applicable to child’s consent in relation to information society services Article 9: Processing of special categories of personal data Article 10: Processing of personal data relating to criminal convictions and offences Article 11: Processing which does not require identification Chapter 3: Rights of the data subject Article 12: Transparent information, communication and modalities for the exercise of the rights of the data subject Article 13: Information to be provided where personal data are collected from the data subject Article 14: Information to be provided where personal data have not been obtained from the data subject Article 15: Right of access by the data subject Article 16: Right to rectification Article 17: Right to erasure (‘right to be forgotten’) Article 18: Right to restriction of processing Article 19: Notification obligation regarding rectification or erasure of personal data or restriction of processing Article 20: Right to data portability Article 21: Right to object Article 22: Automated individual decision-making, including profiling Article 23: Restrictions Chapter 4: Controller and processor Article 24: Responsibility of the controller Article 25: Data protection by design and by default Article 26: Joint controllers Article 27: Representatives of controllers or processors not established in the Union Article 28: Processor Article 29: Processing under the authority of the controller or processor Article 30: Records of processing activities Article 31: Cooperation with the supervisory authority Article 32: Security of processing Article 33: Notification of a personal data breach to the supervisory authority Article 34: Communication of a personal data breach to the data subject Article 35: Data protection impact assessment Article 36: Prior consultation Article 37: Designation of the data protection officer Article 38: Position of the data protection officer Article 39: Tasks of the data protection officer Article 40: Codes of conduct Article 41: Monitoring of approved codes of conduct Article 42: Certification Article 43: Certification bodies Chapter 5: Transfers of personal data Article 44: General principle for transfers Article 45: Transfers on the basis of an adequacy decision Article 46: Transfers subject to appropriate safeguards Article 47: Binding corporate rules Article 48: Transfers or disclosures not authorised by Union law Article 49: Derogations for specific situations Article 50: International cooperation for the protection of personal data Chapter 6: Supervisory authorities Article 51: Supervisory authority Article 52: Independence Article 53: General conditions for the members of the supervisory authority Article 54: Rules on the establishment of the supervisory authority Article 55: Competence Article 56: Competence of the lead supervisory authority Article 57: Tasks Article 58: Powers Article 59: Activity reports Chapter 7: Cooperation and consistency Article 60: Cooperation between the lead supervisory authority and the other supervisory authorities concerned Article 61: Mutual assistance Article 62: Joint operations of supervisory authorities Article 63: Consistency mechanism Article 64: Opinion of the Board Article 65: Dispute resolution by the Board Article 66: Urgency procedure Article 67: Exchange of information Article 68: European Data Protection Board Article 69: Independence Article 70: Tasks of the Board Article 71: Reports Article 72: Procedure Article 73: Chair Article 74: Tasks of the Chair Article 75: Secretariat Article 76: Confidentiality Chapter 8: Remedies, liability and penalties Article 77: Right to lodge a complaint with a supervisory authority Article 78: Right to an effective judicial remedy against a supervisory authority Article 79: Right to an effective judicial remedy against a controller or processor Article 80: Representation of data subjects Article 81: Suspension of proceedings Article 82: Right to compensation and liability Article 83: General conditions for imposing administrative fines Article 84: Penalties Chapter 9: Specific processing situations Article 85: Processing and freedom of expression and information Article 86: Processing and public access to official documents Article 87: Processing of the national identification number Article 88: Processing in the context of employment Article 89: Safeguards and derogations relating to processing for archiving purposes in the public interest, scientific or historical research purposes or statistical purposes Article 90: Obligations of secrecy Article 91: Existing data protection rules of churches and religious associations Chapter 10: Delegated and implementing acts Article 92: Exercise of the delegation Article 93: Committee procedure Chapter 11: Final provisions Article 94: Repeal of Directive 95: /46: /EC Article 95: Relationship with Directive 20: 02: /58: /EC Article 96: Relationship with previously concluded Agreements Article 97: Commission reports Article 98: Review of other Union legal acts on data protection Article 99: Entry into force and application

Legal Text

Article 3 - Territorial scope

1. This Regulation applies to the processing of personal data in the context of the activities of an establishment of a controller or a processor in the Union, regardless of whether the processing takes place in the Union or not.

2. This Regulation applies to the processing of personal data of data subjects who are in the Union by a controller or processor not established in the Union, where the processing activities are related to:

(a) the offering of goods or services, irrespective of whether a payment of the data subject is required, to such data subjects in the Union; or

(b) the monitoring of their behaviour as far as their behaviour takes place within the Union.

3. This Regulation applies to the processing of personal data by a controller not established in the Union, but in a place where Member State law applies by virtue of public international law.

Relevant Recitals

Recital 14: Not Applicable to Legal Persons

The protection afforded by this Regulation should apply to natural persons, whatever their nationality or place of residence, in relation to the processing of their personal data. This Regulation does not cover the processing of personal data which concerns legal persons and in particular undertakings established as legal persons, including the name and the form of the legal person and the contact details of the legal person.

Recital 22: Processing Activities by an Establishment

Any processing of personal data in the context of the activities of an establishment of a controller or a processor in the Union should be carried out in accordance with this Regulation, regardless of whether the processing itself takes place within the Union. Establishment implies the effective and real exercise of activity through stable arrangements. The legal form of such arrangements, whether through a branch or a subsidiary with a legal personality, is not the determining factor in that respect.

Recital 23: Applicable if Targeting EU Data Subjects

In order to ensure that natural persons are not deprived of the protection to which they are entitled under this Regulation, the processing of personal data of data subjects who are in the Union by a controller or a processor not established in the Union should be subject to this Regulation where the processing activities are related to offering goods or services to such data subjects irrespective of whether connected to a payment. In order to determine whether such a controller or processor is offering goods or services to data subjects who are in the Union, it should be ascertained whether it is apparent that the controller or processor envisages offering services to data subjects in one or more Member States in the Union. Whereas the mere accessibility of the controller's, processor's or an intermediary's website in the Union, of an email address or of other contact details, or the use of a language generally used in the third country where the controller is established, is insufficient to ascertain such intention, factors such as the use of a language or a currency generally used in one or more Member States with the possibility of ordering goods and services in that other language, or the mentioning of customers or users who are in the Union, may make it apparent that the controller envisages offering goods or services to data subjects in the Union.

Recital 24: Applicable if Monitoring EU Data Subjects

The processing of personal data of data subjects who are in the Union by a controller or processor not established in the Union should also be subject to this Regulation when it is related to the monitoring of the behaviour of such data subjects in so far as their behaviour takes place within the Union. In order to determine whether a processing activity can be considered to monitor the behaviour of data subjects, it should be ascertained whether natural persons are tracked on the internet including potential subsequent use of personal data processing techniques which consist of profiling a natural person, particularly in order to take decisions concerning her or him or for analysing or predicting her or his personal preferences, behaviours and attitudes.

Recital 25: Applicable When Member State Law is Applicable

Where Member State law applies by virtue of public international law, this Regulation should also apply to a controller not established in the Union, such as in a Member State's diplomatic mission or consular post.

Recital 80: Designated Representative

Where a controller or a processor not established in the Union is processing personal data of data subjects who are in the Union whose processing activities are related to the offering of goods or services, irrespective of whether a payment of the data subject is required, to such data subjects in the Union, or to the monitoring of their behaviour as far as their behaviour takes place within the Union, the controller or the processor should designate a representative, unless the processing is occasional, does not include processing, on a large scale, of special categories of personal data or the processing of personal data relating to criminal convictions and offences, and is unlikely to result in a risk to the rights and freedoms of natural persons, taking into account the nature, context, scope and purposes of the processing or if the controller is a public authority or body. The representative should act on behalf of the controller or the processor and may be addressed by any supervisory authority. The representative should be explicitly designated by a written mandate of the controller or of the processor to act on its behalf with regard to its obligations under this Regulation. The designation of such a representative does not affect the responsibility or liability of the controller or of the processor under this Regulation. Such a representative should perform its tasks according to the mandate received from the controller or processor, including cooperating with the competent supervisory authorities with regard to any action taken to ensure compliance with this Regulation. The designated representative should be subject to enforcement proceedings in the event of non-compliance by the controller or processor.

Recital 122: Competence of Supervisory Authorities

Each supervisory authority should be competent on the territory of its own Member State to exercise the powers and to perform the tasks conferred on it in accordance with this Regulation. This should cover in particular the processing in the context of the activities of an establishment of the controller or processor on the territory of its own Member State, the processing of personal data carried out by public authorities or private bodies acting in the public interest, processing affecting data subjects on its territory or processing carried out by a controller or processor not established in the Union when targeting data subjects residing on its territory. This should include handling complaints lodged by a data subject, conducting investigations on the application of this Regulation and promoting public awareness of the risks, rules, safeguards and rights in relation to the processing of personal data.

Commentary

The first two paragraphs of Article 3 GDPR define the territorial scope of the Regulation on the basis of two main criteria:

• the establishment of a controller or a processor in the Union or
• being active on the EU market by offering services or goods or monitoring behavior.

Where one of these two criteria is met, the relevant provisions of the GDPR will apply to the processing of personal data.

The third paragraph confirms the application of the GDPR to processing activities to which “Member State law applies by virtue of public international law”, such as an embassy of an EU Member State in a third country.

(1) Establishment in the Union

The GDPR does not provide a definition of “establishment” for the purpose of Article 3.

Establishment of a Controller in the Union

The application of this provision depends on two rather broad concepts: the "controller", which may include natural or legal persons, public authorities, agencies or other bodies (see details under Article 4(7) GDPR); and one or more "establishments" of said controller in the Union.

Common Misunderstanding: It is important to note that the GDPR, like other EU law, merely uses the term "Union", even if the GDPR applies to the entire European Economic Area (EEA), which includes not only the 27 EU Member States, but also Norway, Iceland and Lichtenstein. EU law, including the GDPR, may also apply to overseas territories of Member States. The details differ per territory.

An "establishment" does not need to be a separate legal entity in the European Union. It may also be just an office or other form of activity in the Union. Recital 22 states that the “[e]stablishment implies the effective and real exercise of activity through stable arrangements. The legal form of such arrangements, whether through a branch or a subsidiary with a legal personality, is not the determining factor in that respect”. According to the European Data Protection Board (EDPB), "[t]his wording is identical to that found in Recital 19 of Directive 95/46/EC, to which reference has been made in several CJEU rulings broadening the interpretation of the term “establishment”, departing from a formalistic approach whereby undertakings are established solely in the place where they are registered". In particular, in C‑230/14 - Weltimmo the CJEU extended the definition of establishment “to any real and effective activity - even a minimal one - exercised through stable arrangements”.

Example: A subsidiary of a US car manufacturer in Belgium supervises its European activities, including marketing and advertising. The Belgian subsidiary operates through a "stable arrangement" since it carries out activities which are genuine and instrumental to the main economic activity of the US headquarters. As such, it can be seen as an "establishment" under the GDPR.

The EDPB pointed out that the threshold for “stable arrangement” is quite low. Indeed, it could be met by the simple presence of a single employee or agent of a non-EU entity in the Union - if that employee or agent acts with a sufficient degree of stability.

However, this concept is not "without limit" and cannot lead to the conclusion that a “non-EU entity has an establishment in the Union merely because the undertaking’s website is accessible in the Union”. Equally, the mere placement of data processing equipment in the EU is not an "establishment", as there is no human activity.

In conclusion, if a controller or processor established outside the Union exercises “a real and effective activity - even a minimal one” - through “stable arrangements”, regardless of its legal form (e.g. subsidiary, branch, office), in the territory of a Member State, this controller or processor can be considered to have an establishment in that Member State.

Common Misunderstanding: The location of the processing itself is irrelevant to determine the geographical scope of Article 3(1) GDPR. As explained by the EDPB, geographical location is only relevant to answer whether a controller or processor is established within or outside the Union, and whether a non-EU controller or processor has an establishment in the Union.

Linking Processing and EU Establishment: “in the context of the activities”

An establishment in the Union may be considered irrelevant if, and only if, the establishment is not related to the processing of personal data.

Example: A Brazilian company operates in different areas. It has an IT operation that is only active in South America, but also owns a construction company in the EU. The IT operation does not fall under the GDPR, just because there is an unrelated establishment in the EU.

Article 3(1) confirms that it is not necessary that the processing in question is carried out “by” the relevant EU establishment itself; the controller or processor will be subject to obligations under the GDPR whenever the processing is carried out “in the context of the activities” of its relevant establishment in the Union. In this regard, the CJEU has followed a broad interpretation. In C-210/16 - Wirtschaftsakademie, the CJEU stated (with regard to Directive 95/46/EC) that processing carried out in the context of the activities of the controller’s establishment “cannot be interpreted restrictively” and that processing “does not require that such processing be carried out ‘by’ the establishment concerned itself, but only that it be carried out ‘in the context of the activities of’ the establishment”. C‑230/14 - Weltimmo confirmed that the concept “cannot be interpreted restrictively”.

Example: Google US had a sales office in Spain, selling advertisement of the US mother company. The local office was not itself processing personal data of users. Nevertheless, the CJEU found that this was an establishment sufficiently linked with the search engine to make Directive 95/46/EG applicable.

EDPB Guidelines suggests that two factors may help in determining whether processing occurs in the context of an establishment in the Union:

• The first one is the relationship between the non-EU entity and its local establishment in the Union. If a case-by-case analysis on the facts shows that there is an “inextricable link” between the processing of personal data carried out by a non-EU controller or processor and the activities of an EU establishment, EU law will apply to that processing by the non-EU entity, whether or not the EU establishment plays a role in that processing of data.
• The second factor concerns whether or not the local establishment in the EU contributes to the revenues of the non-EU entity. This may potentially be the case, for example, for any foreign operator with a sales office or some other presence in the EU, even if that office has no role in the actual data processing, in particular where the processing takes place in the context of the sales activity in the EU and the activities of the establishment are aimed at the inhabitants of the Member States in which the establishment is located.

At the same time, the EDPB has stated that this requirement should not be interpreted too broadly so as to conclude that the existence of any presence in the EU, with even the remotest links to the data processing activities of a non-EU entity, will be sufficient to bring this processing within the scope of EU data protection law.

Example: When an employee is based in the EU but the processing is not being carried out in the context of the activities of the EU-based employee in the Union (i.e. the processing relates to activities of the controller outside the EU), the mere presence of an employee in the EU will not result in that processing falling within the scope of the GDPR.

(2) Activity on the Union's Market

Data Subject located in the Union

If the controller or the processor is not established in the EU, the GDPR can nonetheless be triggered if personal data of individuals located in the Union are being processed.

Example: A Chinese citizen is located in Berlin. If her behavior gets monitored by an app, the GDPR applies.

In light of Recital 14 GDPR and the EDPB guidelines, the targeting criterion covers any natural person located in the Union to the extent that they are subject to processing, as described in Article 3(2)(a) and (b) GDPR.

Common Misunderstanding: The application of the GDPR does in no way depend on the citizenship of data subjects. Given that the fundamental right to data protection under Article 8 of the Charter is a human right, it applies to all humans equally.

The requirement that the data subject be located in the Union must be assessed at the moment in time when the relevant trigger activity takes place, such as the moment when goods or services are offered, or the moment when the behavior of the data subject is being monitored (letters (a) and (b) below). The processing activities related to data subjects in the Union must have taken place intentionally, rather than inadvertently or incidentally.

Relation with Offering of Goods or Services or the Monitoring of Behaviour

Just having a data subject that is located in the Union is however not enough. In addition, the processing has to "relate to" one of two alternatives to make the GDPR applicable. Merely relating to an activity is again calling for a wide interpretation. The processing must not be "aimed at", be "necessary for" or alike, but must merely "relate to" one of the following activities:

(a) Offering of Goods or Services

The concept of "goods and services" has been clarified in EU law (e.g. Directive 2006/123/EC on services in the internal market) and case law, inter alia on the interpretation of Articles 28 to 37 and 56 to 62 TFEU. “Goods” are products which can be valued in money and which are capable, as such, of forming the subject of commercial and lawful transactions. “Services” are activities developed by the provider and directed to a recipient, typically for remuneration. This includes “any Information Society service, that is to say, any service normally provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of services”, as also supported by the EDPB.

Limitation to "apparent" offering of goods and services

Recital 23 GDPR highlights that it must be "apparent" that the controller or processor is offering goods or services in the EU. This limitation is not directly supported by the text of the GDPR.

Typical signs that a controller or processor apparently offers goods and services in Europe is e.g. the offering of languages that are not typically spoken in third countries (like German, Polish, Italian or Scandinavian Languages), the option to pay in Euros or other local currencies in the Union, using a Top Level Domain that is linked to an EU Member State (such as ".fr") or the option to have goods delivered to the EU. The mere possibility that the website of a controller or processor can be visited is not in itself sufficient to prove intention to offer goods or services.

Example: The website of a local newspaper in Canada can be accessed from the EU. The newspaper only covers local stories, does not offer subscriptions outside of the local province and does not have advertisement aimed at EU residents. The GDPR does not apply to the local newspaper. At the same time a major global newspaper like the New York Times would clearly serve the European market and must apply the GDPR in relation to data subjects based in the EU. Example: An online shop from Chile offers products worldwide. Products are offered to anyone in the EU and the goods are shipped to European addresses and payable in Euro. The shop is available in Spanish, but also in English, French, German, Polish and Italian. The GDPR applies to this online shop.

The matter of sufficient targeting of a local market is debated in relation to Article 17(1)(c) of the Brussels-I-Regulation 1215/2012, which regulates the jurisdiction of national courts in consumer contracts. There is a body of case law defining if a company "directs activities" towards a Member State. This case law seems to be instructive in the interpretation of Recital 23 GDPR.

No limitation to paid goods and services

Contrary to the usual definition of good and services, the GDPR clarifies that processing is covered "irrespective of whether a payment of the data subject is required". This is intended to ensure that many free services that use personal data as an alternative revenue stream are also covered by the GDPR, if these services are offered on the European market.

Example: A small online games provider from Turkey offers a game that is free to use and makes profits with advertisement in the game. It is very popular in Germany among the large Turkish diaspora. The GDPR applies to the processing of personal data of these users.

(b) The Monitoring of Data Subjects' Behaviour

The GDPR also becomes applicable if the behaviour of persons based in the EU is monitored. This is especially relevant for online advertisement and other business models that are based on user tracking.

The monitoring of data subjects’ behaviour is not defined in the GDPR. Recital 24 GDPR nevertheless clarifies that “[i]n order to determine whether a processing activity can be considered to monitor the behaviour of data subjects, it should be ascertained whether natural persons are tracked on the internet including potential subsequent use of personal data processing techniques which consist of profiling a natural person, particularly in order to take decisions concerning her or him or for analysing or predicting her or his personal preferences, behaviours and attitudes.” The EDPB has expanded the scope of this to include not only tracking of a person on the internet, but also tracking through other kinds of network or technologies which involve personal data processing, for instance, tracking through the use of wearables or smart devices.

(3) Public International Law

The GDPR applies to the processing of personal data by a controller not established in the Union if the Member State’s legislation applies by virtue of public international law. Recital 25 GDPR gives the example of processing taking place in a “Member State’s diplomatic mission or consular post”. The EDPB gives as a further example the case of a German cruise ship travelling in international waters. By virtue of public international law, the GDPR will apply even though the ship is in international waters.

Interaction with National Laws

The GDPR is not an isolated law. In many ways controllers, processors and data subjects are also subject to various other national, EU or even international laws.

Opening Clauses under the GDPR

The GDPR sometimes provides for national "opening clauses", so that Member States can regulate certain - especially sensitive - aspects of data processing nationally. For example, matters of freedom of speech, data processing in the employment context, or freedom of information are left to the Member States in Articles 85 to 91 GDPR. Equally, the Member States can implement restrictions on the rights under various Articles, if these restrictions are in the public interest of the Member State (Article 23 GDPR).

Despite early criticism, the GDPR does not regulate the territorial application of such opening clauses or restrictions, but leaves them to national law itself. In the case of most national law that uses a restriction or opening clauses, you have to refer to the territorial scope of the national law, or even general rules of international law to determine its application.

Example: The Austrian Data Protection Act ("Datenschutzgesetz") regulates the use of personal data by journalists in § 9 Data Protection Act, as made possible by the opening clause in Article 85 GDPR. The Austrian law does not, however, specify the geographic application of the Data Protection Act. Under Article 49 of the Austrian Constitution, Austrian laws generally apply to the territory of Austria. It is unclear if Austrian journalists can use this privilege when publishing personal data in other Member States, or if journalists of other Member States have to follow the law of Austria if their journalistic activity expands to the territory of Austria.

Similar examples can be found in many situations where opening clauses are used in cross-boarder contexts and requires additional research on the territorial application of national laws using such opening clauses.

References to National Law

A similar issue occurs when the GDPR simply refers to applicable national law as a preliminary question under a GDPR provision.

In some situations where the GDPR refers to national law, such as contract law in Article 6(1)(b) GDPR there are existing EU law provisions, like the Rome-I-Regulation (EC) No 593/2008 on the applicable contractual law.

Example: A controller is located in Germany, the data subject is a consumer and located in Spain. Under EU regulations, Spanish law provisions for consumer protection apply. To determine if processing is necessary for a specific contract under Article 6(1)(b) GDPR, the controller has to determine if the contract it has formed with the consumer is even valid under Spanish consumer protection law.

Equally, you would have to consider applicable Member State law to determine if any processing of personal data is "necessary" to comply with such an obligation under Article 6(1)(c) or (e) GDPR. Usually provisions in national law, EU law, or international law regulate the scope of such laws.

Example: A controller is located in Member State A for tax reasons, but has subsidiaries with workers in Member States B and C. The controller may have to apply the income tax of Member State A, but also the employment tax law as well as the worker protection laws of A, B and C. Different processing of personal data may be "necessary" depending on the legal requirements in each Member State.

Decisions

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