New EU Data Protection Rules May Cut Costs For Offshore Firms
by Amanda Banks, Tax-News.com, London
28 November 2003

The European Union is considering relaxing its tough rules concerning data protection transfers to non-member states in a move that could significantly cut costs for businesses based in Bermuda and other offshore jurisdictions, according to a report in the Royal Gazette.

Under the present rules, the EU does not permit the transfer of certain data to non-member states unless they have signed up to a special contract or have EU-approved data protection legislation in place. It means firms in those jurisdictions that do not fall into either category must obtain the permission of EU residents in order for data about them to be transferred. Currently, only six non-EU countries have adequate legislation in place according to the EU: the United States, Hungary, Argentina, Switzerland and Canada.

The Bermudan government is considering signing up to the EU directive, though due to the cost implications has commissioned a consultation to decide whether the move will be feasible. However, an EU working party is looking at a solution that will allow multinationals to transfer data to non-EU countries once ‘non-binding rules’ have been issued by a firm to cover all its worldwide operations.

It is system that has been spearheaded by accounting firm KPMG which has dozens of offices located around the globe employing some 100,000 people who said earlier this year: “It became clear that obtaining consent from each member of KPMG's rapidly changing and increasingly mobile workforce of nearly 100,000 personnel worldwide would be cost prohibitive and ineffective”

Therefore, the firm has developed a global policy that provides for minimum standards in the protection of employee data.

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