What US-based companies need to know about GDPR (Updated 2025)
Key Takeaways
1. GDPR Applies to US Businesses
If your US-based company collects, processes, or stores personal data from EU or UK residents through direct services or tracking behaviours like browsing, you must comply with GDPR. Its extraterritorial reach ensures that businesses worldwide are held to the same standards for handling personal data.
2. GDPR Demands Transparency and Accountability
US companies must clearly communicate how they collect and use personal data, obtain valid consent where required, and honour individuals’ rights to access, correct, or delete their data. Non-compliance can lead to severe fines and reputational damage.
3. GDPR Compliance Requires International Cooperation
Businesses must appoint an EU Representative to act as a liaison with regulatory authorities and affected individuals. Since Brexit, UK businesses have needed a separate UK representative. Ensuring your company meets these requirements can prevent regulatory action and safeguard your international operations.
Key GDPR Principles US Businesses Must Follow
The EU General Data Protection Regulation (GDPR) strengthens and unifies personal data protection across the EU. It applies to any company that handles the personal data of EU citizens, residents, or visitors inside or outside the EU. If your US-based business collects, processes, or stores data like names, email addresses, phone numbers, or IP addresses belonging to people in the EU, you must comply with GDPR.
At its core, GDPR demands transparency, accountability, and fairness. You must process data lawfully, limit its use to specified purposes, minimise what you collect, ensure accuracy, and keep it secure. You also need to respect individuals’ rights, such as the right to access, correct, or delete their data.
Does GDPR Apply to US-Based Companies?
Yes. GDPR has extraterritorial reach and applies regardless of your company’s location. If your US business offers goods or services (free or paid) to individuals in the EU or monitors their behaviour, such as tracking browsing habits, you must comply with GDPR.
The regulation doesn’t stop at EU borders. Article 50 of the GDPR outlines international cooperation mechanisms, and foreign governments often support enforcement through mutual assistance treaties and cross-border collaboration. So, even if you operate solely in the US, you’re not out of GDPR’s scope if you handle EU personal data.
GDPR Compliance Requirements for US Companies
US companies must understand and implement several key GDPR obligations to stay compliant. First, they must communicate how and why they process personal data. They must also obtain valid consent where required, respond promptly to data subject rights requests, and maintain detailed records of their data processing activities.
If you don’t have a physical presence in the EU but still process EU personal data, you must appoint an EU Representative under Article 27. This representative is your liaison with EU Supervisory Authorities and affected data subjects. They handle questions, forward complaints, and keep documentation accessible for inspection.
Since Brexit, you must appoint a separate UK Representative if you also have data subjects in the UK. You can’t use the same contact point for both jurisdictions—each region now has its legal framework.
Common Mistakes US Companies Make About GDPR
Many U.S. companies mistakenly assume that the GDPR doesn’t apply to them or misunderstand how it works. These misconceptions can lead to compliance gaps that put businesses at legal and reputational risk. Here are some of the most common errors:
Believing GDPR Only Applies to EU-Based Companies
One of the most widespread myths is that GDPR only affects companies physically located in the European Union. In reality, GDPR applies extraterritorially, meaning any U.S. company that offers goods or services to, or monitors the behaviour of, individuals in the EU or UK must comply, regardless of where the company is based.
Assuming B2B Operations Are Exempt
Some companies think GDPR doesn’t apply if they only deal with other businesses. However, GDPR protects personal data, so the regulation still applies if you collect or process contact details of EU-based individuals (e.g., employees or contacts at a B2B partner).
Thinking Consent Is Always Required
GDPR requires a lawful basis for processing data, but that doesn’t always mean consent. Many U.S. businesses over-rely on consent when they could be using other bases like contract fulfilment or legitimate interest, often resulting in unnecessary friction and poor user experience.
Using Pre-Ticked Boxes or Implied Consent
Consent under GDPR must be explicit and unambiguous. Pre-ticked boxes, silence, or inactivity don’t qualify. This is a major compliance failure, particularly on websites using outdated cookie banners or forms.
Neglecting to Update Privacy Policies
GDPR requires clear, transparent, and accessible privacy notices. Many U.S. companies fail to update their privacy policies to reflect GDPR requirements, which can lead to enforcement actions or loss of customer trust.
Overlooking Vendor Compliance
If your company shares personal data with third-party vendors (e.g., CRM systems, cloud providers, marketing platforms), you’re responsible for ensuring they are also GDPR-compliant. Many U.S. businesses overlook this, failing to place proper Data Processing Agreements (DPAs).
How US Businesses Can Prepare for GDPR Compliance
While GDPR can seem daunting, U.S. companies can take clear, structured steps to meet its requirements and reduce risk. Whether you’re actively targeting EU customers or simply collecting data from visitors in Europe, here’s how to start preparing for GDPR compliance:
1. Determine if the GDPR Applies to Your Business
Start by assessing whether your business processes personal data from EU or UK individuals. If you offer services, run marketing campaigns, ship products, or track behaviour (e.g., through analytics tools), GDPR likely applies—even if you don’t have a physical presence in Europe.
2. Audit Your Data Practices
Conduct a full audit of how your company collects, uses, shares, and stores personal data. This includes data from websites, apps, customer databases, email marketing tools, CRMs, and third-party services. Identify what data you collect, why, and who has access.
3. Update Privacy Notices and Policies
Make sure your privacy policy is GDPR-compliant. It should be clear and easily accessible, and explain the lawful basis for processing data, how long you retain it, what rights users have, and how they can exercise those rights.
4. Review and Improve Consent Mechanisms
If you rely on consent, ensure it’s adequately obtained. Consent must be freely given, specific, informed, and unambiguous. Ditch pre-ticked boxes and unclear language. For cookie tracking, implement a GDPR-compliant cookie banner with granular controls.
5. Appoint a Data Protection Officer (If Required)
While not all U.S. companies need a DPO, appointing a Data Protection Officer may be necessary if your core business involves large-scale monitoring or processing of sensitive data. In other cases, assigning a responsible data lead internally is a good practice.
6. Implement Data Subject Rights Processes
You must be prepared to handle requests from individuals exercising their GDPR rights (e.g., access, rectification, deletion, or data portability). Create internal procedures to verify, respond to, and document these requests within the required timeframes.
7. Secure Your Data
GDPR mandates appropriate technical and organisational security measures. This means encrypting sensitive data, enforcing access controls, regularly updating software, and implementing an incident response plan.
8. Review Contracts with Third-Party Vendors
If you share data with third parties (e.g., cloud services, SaaS tools, marketing platforms), you need formal Data Processing Agreements (DPAs). Ensure your vendors are GDPR-compliant and outline roles, responsibilities, and security expectations.
9. Document Everything
GDPR requires accountability. Keep detailed records of your compliance efforts—data inventories, risk assessments, privacy notices, and consent logs. This will be critical if you’re ever audited or investigated.
GDPR and US Privacy Laws: How They Compare
While GDPR enforces a comprehensive, rights-based approach to privacy, most US privacy laws take a more sector-specific and risk-based stance. In the US, privacy regulations like HIPAA (for health data), COPPA (for children’s data), and CCPA (in California) protect personal data in specific contexts or industries.
GDPR, however, protects all personal data across all sectors. You must follow the same strict rules if you run an e-commerce website, a SaaS platform, or a marketing agency and process EU personal data. Consent, transparency, accountability, and individual rights apply universally.
This broad and consistent application makes GDPR significantly stricter and more comprehensive than most US laws. It also means that US businesses must go further than their local privacy requirements when handling EU data.
GDPR Penalties: What’s at Stake for US Companies?
Non-compliance with GDPR is expensive, both financially and reputationally. Supervisory Authorities across the EU can issue fines of up to €20 million or 4% of global annual turnover, whichever is higher. These penalties don’t just hit large corporations. Small and mid-sized companies have also been fined for mishandling, poor security, or ignoring data subject rights.
The risk doesn’t stop at fines. Non-compliance can damage your brand, erode customer trust, and cause your business partners or clients to walk away. Many EU-based organisations won’t work with companies that don’t meet GDPR requirements. So, staying compliant is as much a competitive necessity as a legal one.
How US Businesses Can Stay GDPR Compliant
If your US business handles EU or UK personal data, you need a strategy. First, map out your data collection, storage, and processing practices. Identify what personal data you hold, where it’s stored, and how it’s used. Implement clear policies for consent, access requests, and data minimisation.
Next, appoint an EU Representative and, if necessary, a UK Representative. This is a legal requirement under Article 27, and failing to appoint one can lead to regulatory action. Your representative will handle inquiries from authorities and individuals and maintain accessible documentation.
Choosing a knowledgeable, experienced representative is critical. At GDPRLocal, our team supports clients across the USA, UK, EU, and Australia. We help you stay compliant, provide due diligence support, and act swiftly on your behalf.
Beyond representation, we offer services, including Data Protection Officer (DPO) appointments, GDPR training, complete documentation packages, and compliance consulting. You can set up your account with us in under five minutes, and we’ll be with you every step of the way.
If you want to make GDPR compliance simple and stress-free, contact us at [email protected] or visit our website for more information.
Frequently Asked Questions (FAQs)
Does GDPR apply to my US-based business?
Yes. If your US business processes personal data of EU or UK residents, such as collecting contact information or tracking website behaviour, you must comply with GDPR. Its extraterritorial scope means it applies even to companies outside the EU if they handle personal data of individuals in the region.
What are the penalties for non-compliance with GDPR for US businesses?
Non-compliance with GDPR can lead to significant penalties, including fines of up to €20 million or 4% of global annual turnover, whichever is higher. Beyond financial penalties, failing to comply can harm your brand, erode customer trust, and make it difficult to form partnerships with EU-based organisations.
Do I need an EU representative if my business is US-based?
Yes. If your US business processes personal data of EU residents and you don’t have a physical presence in the EU, you must appoint an EU Representative. This representative will serve as a point of contact with regulatory authorities and individuals in the EU regarding data protection matters.