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 and the targeting of data subjects located in the EU. 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) Controller or Processor Established in the Union

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

Establishment 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, "[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 Weltimmo the CJEU extended the definition of establishment “to any real and effective activity — even a minimal one — exercised through stable arrangements”.

Particularly interesting in this respect is the ‘Example 1’ given in the aforementioned EDPB guidelines. This example refers to a US car manufacturer with a subsidiary in Belgium which is involved in the supervision of its European activities, including marketing and advertising. In the view of the EDPB, 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, especially in the context of online activities. 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”.

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.

Processing of personal data carried out “in the context of the activities” of an establishment in the Union

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. What this concept means exactly is to be understood in light of the relevant case law.

The courts have generally taken a broad interpretation on the matter. In particular, in 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”. The Weltimmo case confirmed that the concept “cannot be interpreted restrictively”.

The EDPB 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.

On several occasions, for instance, the French CNIL found such a requirement in the activities of Google France, the French subsidiary of Google US. The CNIL has noted the auxiliary function of Google France which manages its website “pour mission d’accompagner les petites et moyennes entreprises en France à travers le développement d’outils de collaboration, de solutions publicitaires ou pour leur donner les clés de compréhension de leurs marchés et de leurs consommateurs”. The website was deemed to be not a simple showcase, as “Google France dispose d’une équipe de vente dédiée à la promotion et à la vente des services de GIL à l’égard des annonceurs et des éditeurs basés en France, comme Google Ads”. Finally, the CNIL has also found a connection when the French subsidiary provides its (advertising) services “grâce aux données collectées par le biais des cookies déposés sur les terminaux des internautes”.

At the same time, the EDPB has stated that this requirement should not be interpreted too broadly 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. For 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".

The GDPR applies regardless of whether the processing takes place in the Union or not

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 in- or outside the Union and whether a non-EU controller or processor has an establishment in the Union.

If both the controller and/or the processor have an establishment in the European Union and are therefore both subject to the GDPR under Article 3(1), the conclusion is fairly simple: they will both have to adhere to their respective obligations. However, the situation becomes slightly more complicated if one of the two parties is not subject to the territorial scope of the GDPR (as described above). In this event, there are essentially two cases: (i) a controller subject to the GDPR assigns a part of the processing to a processor not subject to the GDPR and, conversely, (ii) a controller not subject to the GDPR assigns a part of the processing to a processor subject to the GDPR.

In the first case, (i), the controller subject to the GDPR must ensure that the conditions set out in Article 28 GDPR are met. In particular, the processor has to ensure that its actions comply with the requirements of the GDPR. In addition, the controller must only proceed with the assignment after having the processor accept a contract that allows him to monitor the performance of the processor, as stipulated in Article 28(3) GDPR. In other words, “[t]he processor located outside the Union will therefore become indirectly subject to some obligations imposed by controllers subject to the GDPR by virtue of contractual arrangements under Article 28. Moreover, provisions of Chapter V of the GDPR may apply". In the second case, (ii), the controller will not become subject to the GDPR simply because it chooses to use a processor who is. According to the EDPB, the activities of the processor are not “inextricably linked” with those of the controller. Consequently, the use of a processor territorially subject to the GDPR does not lead to the application of the GDPR to the controller.

(2) Targeting the Union Market

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. 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. In other words, the protection is neither limited by residence nor nationality. 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.

(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.

Recital 23 GDPR confirms that the mere act of visiting a controller’s or processor’s website is not in itself sufficient to prove intention to offer goods or services. This was also confirmed in the Verein für Konsumenteninformation decision, where the CJEU held that merely being able to access a website in a Member State is not enough to lead to an "establishment" of the controller or processor in that Member State. Therefore, there must be more engagement between the data subject and the controller or processor for the requirement of offering "goods and services" to be fulfilled. The processing is covered "irrespective of whether a payment of the data subject is required".

(b) The Monitoring of Data Subjects' Behaviour

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, so for instance, tracking through the use of wearables or smart devices.

(3) The Public International Law Criterion

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.

Decisions

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