Essential Data Protection Considerations When Creating a Subsidiary Company in Romania: A GDPR Compliance Roadmap

Establishing a subsidiary in Romania offers substantial opportunities for businesses seeking to expand within the European Union. The Romanian market presents an attractive blend of skilled labour, competitive operational costs, and a strategic geographical position. However, companies venturing into this territory must navigate a complex landscape of data protection regulations. Ensuring compliance with the General Data Protection Regulation and Romanian-specific legal frameworks is not merely a bureaucratic formality but a fundamental pillar for sustainable and lawful operations. This roadmap aims to guide organisations through the essential considerations for safeguarding personal data when setting up a Romanian subsidiary, emphasizing the practical steps necessary to achieve and maintain compliance.

Understanding gdpr requirements for romanian subsidiary establishments

The General Data Protection Regulation, which became directly applicable across all European Union member states on the twenty-fifth of May 2018, forms the bedrock of data protection law throughout the bloc. Romania, as a member state, adheres to this comprehensive framework. However, it is crucial to recognise that Romania has supplemented the GDPR with its own national legislation, notably Law Number 190 from 2018, which came into effect on the thirty-first of July 2018. This national law addresses specific areas such as the processing of genetic, biometric, and health data, as well as the handling of national identification numbers and employment-related information. For any organisation establishing a presence in Romania, understanding the interplay between the overarching GDPR and these national provisions is paramount to ensuring lawful data handling practices.

Key gdpr principles applicable to cross-border data processing operations

Data handling within a Romanian subsidiary must be anchored in the fundamental principles laid out by the GDPR, alongside the overarching principle of accountability. These principles demand that personal data be processed lawfully, fairly, and transparently. Data collection must be for specified, explicit, and legitimate purposes, and the information gathered should be adequate, relevant, and limited to what is necessary for those purposes. Accuracy is another cornerstone, requiring that data be kept up to date and that inaccurate information be erased or rectified without delay. Furthermore, personal data must not be retained for longer than is necessary for the purposes for which it was collected, although certain types of information, such as payroll records, may be subject to extended retention periods mandated by other legal obligations. For instance, some payroll data may need to be kept for fifty years. Data must also be processed in a manner that ensures appropriate security, including protection against unauthorised or unlawful processing and against accidental loss, destruction, or damage. This necessitates the implementation of appropriate technical and organisational measures, as outlined in Article 32 of the GDPR. The principle of accountability requires organisations to demonstrate compliance with all these principles, meaning that businesses must maintain thorough documentation of their data processing activities and be prepared to prove their adherence to data protection standards.

Determining Data Controller and Processor Responsibilities in Romanian Entities

Within the framework of data protection law, distinct roles and responsibilities are assigned to different entities involved in processing personal data. The data controller is the entity that determines the purposes and means of processing personal data. In the context of establishing a Romanian subsidiary, the parent company and the subsidiary itself may both act as controllers, or they may operate as joint controllers, depending on the specific arrangements and decision-making structures in place. It is essential to clearly define these roles from the outset, as the controller bears primary responsibility for ensuring compliance with data protection obligations. The data processor, on the other hand, processes personal data on behalf of the controller. This could include third-party service providers such as IT support firms, payroll service providers, or security companies. When engaging processors, the controller must ensure that these entities also comply with data protection standards. This is typically achieved through robust contractual arrangements, often referred to as Data Processing Agreements, which clearly set out the obligations of the processor and the safeguards that must be in place. Romanian law does not impose additional specific obligations on processors beyond those stipulated in the GDPR, but due diligence in vendor management remains a critical aspect of maintaining overall compliance. Understanding whether the Romanian entity will act as a controller or processor, or indeed both in different contexts, is a foundational step in establishing a compliant data processing infrastructure.

Establishing compliant data processing infrastructure in your romanian subsidiary

Creating a Romanian subsidiary that respects data protection norms requires more than simply acknowledging the existence of GDPR and national legislation. It demands the construction of a robust and functional infrastructure designed to safeguard personal information at every stage of its lifecycle. This involves implementing appropriate technical and organisational measures, establishing clear lawful bases for all data processing activities, and ensuring transparency in how personal data is collected and used. A comprehensive data audit serves as the essential first step in this process, enabling the organisation to map the flow of data within the subsidiary, understand where data originates, why it is collected, how long it is retained, and whether it is transferred to third parties. Such an audit provides a clear picture of the data landscape and identifies areas where compliance measures need to be strengthened or implemented from scratch.

Implementing technical and organisational measures under romanian data protection law

The GDPR mandates that controllers and processors implement appropriate technical and organisational measures to ensure a level of security appropriate to the risk posed by the processing. These measures are not one-size-fits-all but must be tailored to the specific nature, scope, context, and purposes of processing, as well as the likelihood and severity of risks to the rights and freedoms of individuals. Technical measures encompass a wide range of safeguards, including the use of encryption technologies to protect data both at rest and in transit. For instance, websites handling personal data should employ HTTPS encryption, secured by SSL certificates, to protect data transmitted between users and the server. Strong password policies, robust authentication mechanisms, and up-to-date anti-virus software are also essential components of a secure technical environment. Organisational measures include the establishment of internal policies and procedures governing data access, the implementation of regular staff training programmes to ensure that employees understand their data protection responsibilities, and the development of clear protocols for managing data breaches. Romanian authorities, specifically the National Supervisory Authority for Personal Data Processing, known as ANSPDCP, closely monitor compliance with these security requirements and have the authority to issue substantial fines for failures. Penalties for breaches can reach up to twenty million euros or four percent of the company's global annual turnover, whichever is higher. Romanian authorities have historically issued fines ranging from three thousand euros to one hundred and thirty thousand euros, demonstrating their willingness to enforce data protection standards. Therefore, a proactive and comprehensive approach to security is not merely advisable but essential for avoiding significant financial and reputational damage.

Setting Up Lawful Bases for Processing Employee and Customer Information

Every instance of personal data processing must be grounded in one of the lawful bases set out in the GDPR. These bases include consent from the data subject, the necessity of processing for the performance of a contract, compliance with a legal obligation, protection of vital interests, performance of a task carried out in the public interest or in the exercise of official authority, and the pursuit of legitimate interests by the controller or a third party. When establishing a Romanian subsidiary, it is vital to identify the appropriate lawful basis for each processing activity from the outset. For employee data, processing is often justified on the basis of contractual necessity, for example, to manage payroll, administer employment contracts, and fulfil statutory obligations related to taxation and social security. However, certain forms of employee monitoring, such as electronic communications surveillance or video surveillance, require careful justification under the legitimate interests basis. Romanian Law 190 from 2018 specifies that such monitoring is permissible only if it is justified by legitimate interests, employees are informed in advance, and trade unions or employee representatives have been consulted. Processing of sensitive categories of personal data, including health data, biometric data, and genetic data, requires a higher threshold, generally necessitating explicit consent from the individual or a clear legal requirement. For customer data, processing may be justified by contractual necessity, such as fulfilling orders or providing services, or by legitimate interests, such as direct marketing. However, electronic marketing activities are also regulated under Law Number 506 from 2004, which requires express consent to send commercial communications and provides individuals with the right to object. It is imperative that the Romanian subsidiary maintains a clear and comprehensive record of the lawful bases relied upon for each processing activity, as this forms a core element of the accountability principle. Privacy policies must be written in plain language, easily accessible, and clearly communicate the purposes of data processing, the lawful bases relied upon, and the rights available to data subjects.

Navigating cross-border data transfers between uk and romanian operations

For a UK-based company establishing a Romanian subsidiary, the movement of personal data between the two jurisdictions presents a particular set of challenges. While both the UK and Romania operate under robust data protection frameworks, the transfer of data across borders must comply with specific legal mechanisms designed to ensure that the level of protection afforded to personal data is not undermined by such transfers. Understanding the available transfer mechanisms and ensuring that appropriate safeguards are in place is essential for maintaining compliance and avoiding disruption to business operations. The GDPR provides several mechanisms for lawfully transferring personal data outside the European Economic Area, and organisations must carefully evaluate which mechanism is appropriate for their specific circumstances.

Adequacy Decisions and Standard Contractual Clauses for International Data Flows

One of the primary mechanisms for lawful international data transfers under the GDPR is the adequacy decision. An adequacy decision is a determination by the European Commission that a third country, a territory, or one or more specified sectors within a third country, or an international organisation, ensures an adequate level of data protection. If such a decision is in place, personal data can flow freely from the European Economic Area to that jurisdiction without the need for additional safeguards. Following Brexit, the European Commission adopted adequacy decisions covering transfers of personal data from the European Union to the United Kingdom, meaning that data can generally flow from Romania to the UK without additional mechanisms. However, organisations must remain vigilant, as adequacy decisions can be reviewed, amended, or even revoked if the level of protection in the third country changes. In the absence of an adequacy decision, or as an alternative mechanism, organisations can rely on Standard Contractual Clauses. These are pre-approved sets of contractual terms issued by the European Commission that impose specific data protection obligations on both the data exporter and the data importer. When transferring personal data from a Romanian subsidiary to a UK entity, or indeed to any other jurisdiction, organisations should consider implementing Standard Contractual Clauses within their Data Processing Agreements. These clauses provide legally enforceable rights and obligations that ensure the protection of personal data. In addition to Standard Contractual Clauses, organisations must also conduct a Transfer Impact Assessment to evaluate whether there are any legal or practical obstacles in the destination country that might undermine the protections provided by the clauses. This assessment should consider factors such as government surveillance laws, the availability of legal remedies, and the overall data protection environment in the receiving country.

Managing data subject rights across multiple jurisdictions

Data subjects possess a range of rights under the GDPR, including the right to access their personal data, the right to rectification, the right to erasure, the right to restriction of processing, the right to data portability, and the right to object to processing. When operating across multiple jurisdictions, such as the UK and Romania, organisations must ensure that individuals can effectively exercise these rights regardless of where their data is processed. This requires establishing clear and efficient procedures for handling Data Subject Access Requests, often abbreviated as DSARs. Individuals have the right to request confirmation as to whether their personal data is being processed, to access that data, and to receive information about the purposes of processing, the categories of data involved, and the recipients to whom the data has been disclosed. Organisations must respond to such requests within one month, although this period may be extended by a further two months in complex cases, provided the individual is informed of the delay and the reasons for it. The right to erasure, sometimes referred to as the right to be forgotten, allows individuals to request the deletion of their personal data in certain circumstances, such as when the data is no longer necessary for the purposes for which it was collected, or when the individual withdraws consent. Managing these rights across a multinational operation requires robust internal systems, clear communication channels, and well-trained staff. It is advisable to establish a centralised point of contact for handling data subject requests and to ensure that all entities within the corporate group, including the Romanian subsidiary, are aware of their obligations and can efficiently respond to requests. Failure to adequately manage data subject rights can lead to complaints to supervisory authorities and potential enforcement action, including substantial fines.

Appointing data protection officers and meeting romanian supervisory authority requirements

The role of the Data Protection Officer, commonly known as the DPO, is a cornerstone of GDPR compliance. While not all organisations are required to appoint a DPO, those that meet certain criteria must do so, and even where appointment is not mandatory, it is often considered best practice. In Romania, the appointment of a DPO is subject to specific national requirements that go beyond the standard GDPR criteria. Understanding when a DPO must be appointed, the responsibilities of the role, and the registration and notification obligations with the Romanian supervisory authority are critical steps in establishing a compliant subsidiary. The Romanian National Supervisory Authority for Personal Data Processing plays a central role in enforcing data protection law in Romania, and organisations must be prepared to engage with this authority, particularly in the context of data breach notifications and formal investigations.

Registration Obligations with the Romanian National Supervisory Authority for Personal Data Processing

Prior to the entry into force of the GDPR, many member states, including Romania, had registration or notification requirements, whereby organisations were required to register their data processing activities with the national supervisory authority before commencing processing. The GDPR abolished such blanket registration obligations, emphasizing instead the principle of accountability, whereby organisations must be able to demonstrate compliance rather than seek prior approval. As a result, obligations to notify the ANSPDCP were repealed when the GDPR came into effect. However, this does not mean that organisations have no obligations towards the supervisory authority. Organisations are still required to cooperate with the ANSPDCP, respond to requests for information, and, in certain circumstances, seek prior consultation. One such circumstance arises where a Data Protection Impact Assessment, known as a DPIA, indicates that the processing would result in a high risk to the rights and freedoms of individuals if the controller does not implement measures to mitigate the risk. In such cases, the controller must consult the ANSPDCP before commencing the processing. A DPIA is required when processing is likely to result in a high risk to individuals, particularly when using new technologies, when conducting large-scale processing of sensitive data, or when systematically monitoring individuals on a large scale. Romanian law specifies additional scenarios in which a DPIA is mandatory, such as when using new technologies on a large scale. Furthermore, under Romanian Law 190 from 2018, organisations that process national identification numbers based on the lawful basis of legitimate interest must appoint a Data Protection Officer, even if they do not meet the standard GDPR thresholds for mandatory DPO appointment. This is a significant national derogation that organisations establishing a Romanian subsidiary must be aware of. The DPO must be appointed on the basis of professional qualities, in particular expert knowledge of data protection law and practices, and the ability to fulfil the tasks set out in the GDPR. The DPO serves as a point of contact for the supervisory authority and for individuals whose data is processed, and they are responsible for monitoring compliance, providing advice, and cooperating with the authority.

Developing data breach notification procedures compliant with romanian regulations

A data breach can occur in various forms, including unauthorised access to personal data, accidental loss or destruction of data, or unlawful disclosure. The GDPR imposes strict obligations on organisations in the event of a personal data breach. Controllers must notify the supervisory authority without undue delay, and where feasible, not later than seventy-two hours after becoming aware of the breach, unless the breach is unlikely to result in a risk to the rights and freedoms of natural persons. In Romania, this notification must be made to the ANSPDCP. The notification must include, at a minimum, a description of the nature of the breach, the categories and approximate number of data subjects and personal data records concerned, the name and contact details of the Data Protection Officer or other contact point, a description of the likely consequences of the breach, and a description of the measures taken or proposed to address the breach and mitigate its potential adverse effects. If the breach is likely to result in a high risk to the rights and freedoms of individuals, the controller must also communicate the breach to the affected data subjects without undue delay, unless the data was encrypted or other measures have been taken to render the data unintelligible to unauthorised persons. Developing a comprehensive data breach response plan is therefore essential. This plan should include procedures for identifying and assessing breaches, a clear escalation process, predefined templates for notifications to the supervisory authority and to data subjects, and arrangements for conducting a post-breach review to identify lessons learned and prevent recurrence. Regular testing of the breach response plan through simulations or tabletop exercises can help ensure that the organisation is prepared to respond swiftly and effectively in the event of a real breach. The ANSPDCP has the authority to investigate breaches, issue warnings, and impose substantial fines for failures to comply with breach notification obligations. Fines for breaches of data protection law can reach up to twenty million euros or four percent of global annual turnover, and for public authorities and bodies, Romanian law specifies fines ranging from ten thousand Romanian Lei to two hundred thousand Romanian Lei, approximately two thousand one hundred euros to forty-two thousand euros. Beyond financial penalties, a failure to manage a data breach appropriately can result in significant reputational damage, loss of customer trust, and potential civil litigation. Therefore, establishing robust breach notification procedures is not merely a legal obligation but a critical component of responsible data governance.