Data sovereignty has become an increasingly important issue for Dutch organizations, especially after recent developments around digital independence and privacy laws. With growing reliance on foreign cloud providers and AI services, more and more companies are asking what laws and regulations apply to their data.
In the Netherlands, a complex interplay of European and national legislation governs how organizations should handle data. From the AVG to specific government directives, the legal landscape around data sovereignty is constantly evolving and has direct implications for how you as an organization set up your IT infrastructure.
What is data sovereignty and why is it important in the Netherlands?
Data sovereignty means that a country or organization has complete control over the storage, processing and access to its digital data, without interference from foreign authorities. It involves the right to decide where data is stored and who has access to it.
In the Netherlands, data sovereignty has become crucial due to several developments. The invalidation of the EU-US Privacy Shield in 2020 by the European Court of Justice forced thousands of Dutch companies to adjust their data transfers. This highlighted the question of who really controls digital assets.
The reliance on U.S. tech giants such as Microsoft, Google and Amazon for cloud services creates legal risks. U.S. laws such as the CLOUD Act can allow foreign authorities to force access to data, even if it is stored in the Netherlands. This conflict between different legal systems makes data sovereignty a strategic priority for Dutch organizations.
Which Dutch laws are tangentially related to data sovereignty?
The Netherlands has no specific data sovereignty law, but several laws and regulations influence how organizations should handle data sovereignty. The most important are:
- for personal data especially the AVG and the AVG Implementation Act (UAVG);
- for transfers outside the EEA especially Chapter V AVG, adequacy decisions, SCCs/BCRs and in some cases additional measures;
- for government organizations
additionally BIO/BIO2 and the Government-wide cloud policy/implementation framework risk assessment cloud use as standards frameworks/policies, not as general law for all organizations; - for critical and essential organizations soon the Cybersecurity Act as implementation of NIS2, but it was not yet in direct effect for organizations, according to the government pages consulted;
- In addition, for the financial sector, DORA and outsourcing rules/supervision from DNB and AFM play a major role;
- For non-personal data and cloud switching/access to data, the EU Data Act and Data Governance Act may also be relevant.
How does the AVG relate to data sovereignty?
The General Data Protection Regulation (AVG) regulates data transfers to countries outside the EU and sets strict requirements for adequate protection of personal data. Chapter V of the AVG specifically addresses the transfer of personal data to third countries.
Data transfers to the U.S. have been subject to the new EU-US Data Privacy Framework, which replaces the Privacy Shield, since 2023. This framework provides a legal basis for data transfers, but many Dutch organizations remain cautious because of previous legal uncertainty.
The AVG requires organizations to implement appropriate safeguards in international data transfers. This can be done through standard contractual clauses (SCCs), binding corporate rules or adequacy decisions by the European Commission.
Transfers based on SCCs/BCRs often require a transfer assessment; DPF transfers to certified parties are different. This Transfer Impact Assessment (TIA) must demonstrate that the level of protection is equivalent to that within the EU.
What data location requirements does the Netherlands have for government organizations?
Dutch government organizations must comply with the Government Information Security Baseline (BIO), which sets specific requirements for data location and cloud use. Sensitive government data must remain within EU borders and under EU jurisdiction.
The BIO distinguishes different classification levels for government information. Information classified as ‘Departmentally Confidential’ or higher is subject to the requirement that it may only be stored and processed within the Netherlands. For lower classifications, storage within the EU is permitted, provided additional security requirements are met.
Government organizations, when tendering IT services, should explicitly require suppliers to be transparent about data locations, access rights and jurisdiction. The contract should include safeguards that prevent foreign authorities from forcing access to Dutch government data.
What are the compliance requirements for cloud services in the Netherlands?
Dutch organizations using cloud services must meet a combination of European and national compliance requirements. The most important are AVG compliance, implementation of the NIS2 directive and sector-specific regulations, for example for financial services or healthcare.
For cloud vendors, ISO 27001 certification and SOC 2 compliance are often minimum requirements. These standards ensure that adequate security measures have been implemented for information security and data processing.
In a number of cases, organizations must conduct a Data Protection Impact Assessment (DPIA) before migrating sensitive personal data to the cloud. This assessment should evaluate the risks to data subjects and identify appropriate security measures.
Specifically for government organizations, there may be an additional requirement of a Supplier Risk Analysis (LRA) when using cloud services. This analysis assesses whether the cloud provider meets the security requirements of the BIO and other relevant standards.
How Pegamento helps with compliance around data sovereignty
We understand the complexities of regulations around data sovereignty and offer customized solutions that meet Dutch compliance requirements. Through our partnership with Uniserver, a certified VMware Sovereign Cloud partner, we can guarantee full data sovereignty without the traditional complexities of costly customization.
Our approach to compliance around data sovereignty includes:
- Dutch data location, with the guarantee that data remains under Dutch jurisdiction
- ISO 27001-certified information security and compliance monitoring
- Preventing forced entry by foreign authorities
- Data classification and advanced security controls
- Data portability to avoid vendor dependency
As a “one-stop shop,” you take everything under one roof: from development to implementation and ongoing compliance monitoring. No complex vendor management or silos, just one point of contact for your overall data sovereignty strategy.
Want to know how we can help your organization with compliance around data sovereignty? Contact us for a no-obligation discussion about your specific situation and compliance requirements.
Frequently Asked Questions
As an organization, how can I verify that my current cloud vendor meets Dutch data sovereignty requirements?
Start by requesting a detailed data location report from your vendor, including information on backups and disaster recovery. Check whether they have ISO 27001 certification and ask for transparency on which foreign laws may apply. In addition, conduct a Transfer Impact Assessment (TIA) to assess whether the level of protection is sufficient.
What are the financial consequences if my organization does not comply with data sovereignty requirements?
The fines can be significant: AVG violations can result in fines of up to 4% of annual revenue or €20 million. In addition, you risk reputational damage, loss of government contracts, and potentially legal claims from data subjects. For government organizations, non-compliance can lead to exclusion from future tenders and political pressure.
Can I still use U.S. cloud services such as Microsoft Azure or AWS and still be compliant?
Yes, but this requires additional measures. You must use the EU-US Data Privacy Framework, implement additional contractual safeguards, and conduct a thorough Transfer Impact Assessment. However, for highly sensitive data or government organizations, European alternatives are often advised to consider due to CLOUD Act risks.
On average, how long does it take an organization to become fully compliant with data sovereignty requirements?
This depends on your current situation and complexity. A thorough compliance audit usually takes 4-6 weeks, followed by 3-6 months for implementation of necessary changes. For organizations that need to fully migrate to new cloud infrastructure, the process can take 6-12 months, depending on the size of your IT landscape.
What practical steps should I take if my organization is subject to the NIS2 directive?
Start by identifying your critical IT systems and data flows. Then implement a risk management process, establish a cybersecurity team, and ensure incident response procedures are in place. You should also implement reporting requirements and conduct regular security audits. In addition, consider adjusting your cloud strategy to vendors that can guarantee NIS2 compliance.
How can I ensure that my data sovereignty strategy is future-proof?
Focus on vendor diversification and data portability to avoid vendor lock-in. Choose cloud solutions that support multi-cloud deployment and ensure standardized data export capabilities. Regularly update your legal compliance requirements as legislation evolves quickly. Invest in in-house expertise or work with specialized partners who closely monitor developments.
Be sure to listen to our podcast on data sovereignty as well
This is a podcast produced in collaboration with Uniserver, Pegamento’s trusted partner for sovereign cloud services. The interview features Rob Kamphuis (Director of Public Affairs) and Jeroen Wouda (Technical Cloud Specialist) from Uniserver.
