Place of data storage for cross-border transactions: What every selling company needs to know.

When a Warsaw-based company is in talks with an investor from London, New York or Singapore, the focus is usually on the valuation, the terms of the contract and the timetable. Rarely does anyone ask about what appears to be a technical matter: where, exactly, are the servers on which all the transaction documentation is stored? Yet it is precisely this question that can have a decisive influence on the course of the entire transaction.

The data location is not the same as the legal jurisdiction to which the data belongs

It is worth distinguishing between two terms that are often confused. The data location refers to the physical place where files are stored, for example a server room in Frankfurt or Warsaw. The legal jurisdiction of the data is a different matter: which law governs this data, regardless of where it is located.

This difference has practical implications. A virtual data room may store documents on a server in Germany, but if the provider of this tool is a US company, it may be subject to the US CLOUD Act. This law enables US authorities to demand access to data stored by US technology companies, regardless of the country in which the servers are physically located. It is precisely this mechanism that causes concern for European investors and legal advisers when selecting a tool for transactions.

What does the GDPR say?

The General Data Protection Regulation applies to any organisation that processes data relating to residents of the European Union, regardless of where that organisation is based. In business practice, this means that personnel records, contracts with business partners or customer data disclosed during a company audit must be handled in accordance with these regulations, even if there is a fund from California sitting on the other side of the negotiating table.

If data nevertheless has to leave the European Economic Area, a suitable legal mechanism is required, usually the Standard Contractual Clauses approved by the European Commission. This issue regularly arises in connection with judgments of the Court of Justice of the European Union. The best-known example was the 2020 ‘Schrems II’ judgement, which declared the previous mechanism for data transfers to the United States – known as the ‘Privacy Shield’ – to be invalid. Since then, the market for document management solutions has had to adapt its legal framework, and the issue of data transfers outside the Union is no longer a mere formality.

New context: DORA

From 2025, the EU Regulation on Digital Operational Resilience in the Financial Sector (DORA) will come into force. It imposes additional requirements on IT service providers that serve banks, investment funds and other financial institutions. In practice, this means that the tools used in transactions with financial institutions must meet stricter standards regarding business continuity and real-time monitoring.

The regulatory authorities no longer want explanations; they want evidence

A clear direction of change is emerging amongst market players for the year 2026. The regulatory focus is shifting from the mere existence of compliance procedures to demonstrating that these are actually applied in day-to-day operations. This means that records of user activity, access history for specific documents or evidence of every change to access rights are no longer merely a security measure, but serve as evidence in the event of an audit.

Questions to ask yourself before choosing a tool

A company preparing a transaction with a foreign investor should ask the virtual data room provider a number of specific questions:

• Where are the servers physically located, and is it possible to select the hosting region?

• On what legal basis would any data transfer outside the European Economic Area take place, e.g. on the basis of standard contractual clauses or a decision by the European Commission confirming an adequate level of protection?

• What independent security certifications does the provider itself hold, and which does the data centre where the service is operated hold? These include, for example, the ISO/IEC 27001 certificate, the SOC 2 Type II report or an external security audit.

• Does the system maintain a detailed log of user activities that can be presented as evidence of compliance during an audit or inspection?

Summary

The location where transaction data is stored is not merely a technical detail, but a key factor in the legal certainty of the entire transaction. In a world where an investor from one continent acquires a company on another continent, the answer to the question of where the data is stored is sometimes just as important as the answer to the question of the company’s value.

About us

DealDone is a specialized company that offers high-quality products in the field of information and data security. We provide digitization services and software based on modern technologies for handling confidential information, classified information, and sensitive data, as well as for the digitization, backup, encryption, and delivery of data and documents both within and outside organizations.

For nearly 15 years, DealDone has specialized in providing solutions for the digitization, archiving, and distribution of documents in the form of a Document Management System (DMS) or a Virtual Data Room (VDR).

DealDone independently developed and launched the SECUDO VDR system. SECUDO is a platform for the secure digitization, archiving, exchange, and processing of corporate documents and data, offered as a cloud solution in a Software-as-a-Service model for business customers.

DealDone also owns the portals www.platformainwestora.pl and www.sprzedamfirme.com, through which the company supports transaction processes related to the sale of companies, fundraising, and the search for investors for projects.

In 2025, DealDone joined the international platform Dealsuite (www.dealsuite.com), which supports professionals in the field of mergers and acquisitions (M&A). Thanks to this collaboration, we can respond even more effectively to market needs and offer our clients VDR SECUDO—a secure and intuitive solution for document management in transaction processes.