Data Sovereignty in Europe: What Every Business Needs to Know

Data sovereignty — the principle that data is subject to the laws of the jurisdiction where it is stored — has become one of the most important concepts in European business technology. What once felt like an abstract legal concern is now a practical, daily consideration for any organisation that processes personal data. If you are a European business relying on US-hosted SaaS products, this guide explains the legal landscape, the risks you face, and the concrete steps you can take to protect your organisation.

The legal foundations

Three legal developments define the current data sovereignty landscape for European businesses.

GDPR (2018) established that any organisation processing personal data of EU residents must comply with strict requirements around consent, purpose limitation, data minimisation, and the right to erasure. Crucially, GDPR restricts the transfer of personal data outside the EU unless the receiving country provides an adequate level of data protection.

Schrems II (2020) was the ruling by the Court of Justice of the European Union that invalidated the EU-US Privacy Shield framework. The court found that US surveillance laws, particularly FISA Section 702, are incompatible with EU fundamental rights. This left thousands of businesses scrambling to find alternative legal bases for transatlantic data transfers. Standard Contractual Clauses remain available, but the court made clear that they must be accompanied by supplementary measures — and many legal scholars argue these measures are insufficient when the data processor is a US company.

The US CLOUD Act (2018) allows US law enforcement to compel American companies to disclose data stored anywhere in the world. This creates a direct conflict with GDPR. Even if a US cloud provider operates a data centre in Germany or France, the parent company is still subject to US jurisdiction. The EU-US Data Privacy Framework, adopted in 2023, attempts to bridge this gap, but it faces ongoing legal challenges and many data protection professionals consider it a temporary patch rather than a permanent solution.

What this means in practice

For a European business using Gmail for company email, Google Drive for file storage, AWS for cloud infrastructure, and Mailchimp for marketing — a common stack — every piece of customer and employee data processed through these services is potentially subject to US government access. Your data protection officer cannot guarantee that this data will not be disclosed to a foreign authority without your knowledge.

This is not a hypothetical risk. Data protection authorities across Europe have become increasingly active. The Austrian DSB found that the use of Google Analytics on a European website violated GDPR. The French CNIL issued similar findings. The Italian Garante and the Norwegian Datatilsynet have followed suit. Fines under GDPR can reach four percent of global annual turnover, but the reputational damage from a data sovereignty incident can be even more costly.

Building a sovereign stack

The good news is that the European software ecosystem now offers mature, feature-competitive alternatives across virtually every category. Here is what a sovereign European stack looks like:

Email and communication. Proton Mail and Tuta provide end-to-end encrypted email hosted in Switzerland and Germany respectively, replacing Gmail. Both are fully GDPR-compliant and outside US jurisdiction.

File storage and collaboration. Nextcloud offers self-hosted file sync with built-in office suite capabilities, replacing Google Drive and Dropbox. For teams that prefer a managed, zero-knowledge encrypted solution, Tresorit is hosted in Switzerland.

Cloud infrastructure. Hetzner Cloud and Scaleway provide IaaS and cloud computing services from data centres in Germany, Finland, France, and the Netherlands, replacing AWS and Google Cloud.

Analytics. Plausible Analytics is a privacy-first web analytics platform hosted in the EU, replacing Google Analytics without requiring cookie consent banners.

Design. Penpot is an open source design tool from Spain that replaces Figma with full data sovereignty.

Email marketing. Mailjet handles both marketing and transactional email from France, replacing Mailchimp and SendGrid.

Databases. Baserow provides a no-code database platform from the Netherlands, replacing Airtable.

A practical migration approach

Migrating an entire software stack at once is neither realistic nor necessary. A pragmatic approach is to prioritise based on risk:

1. Start with the highest-risk services. Email, file storage, and cloud infrastructure typically hold the most sensitive data. Moving from Gmail to Proton Mail or from Google Drive to Nextcloud addresses the largest exposure first.

2. Address customer-facing data processing next. Analytics and email marketing tools process data about your customers and website visitors — the data most directly covered by GDPR.

3. Evaluate internal tools last. Design tools, databases, and project management are important but typically involve less personal data.

For each migration, review the relevant GDPR-compliant software listings on our site to compare your options. Every product profile includes details on hosting location, data processing practices, and compliance certifications.

The cost of inaction

Some organisations delay acting on data sovereignty because migration has a cost — in time, training, and temporary productivity loss. This is true. But the cost of inaction is higher and growing. Regulatory enforcement is accelerating, not slowing. The legal basis for transatlantic data transfers remains unstable. And customers, particularly in B2B markets, are increasingly asking where their data is stored before signing contracts.

Data sovereignty is not a trend that will pass. It is the direction European regulation is moving, and the organisations that act now will be better positioned — legally, operationally, and competitively — than those that wait for the next Schrems ruling or the next record fine to force their hand.

Browse all European software alternatives by category or explore products by hosting country to start building your sovereign stack today.