The "Processing in Context of Local Establishment" factor is a key element in determining the territorial scope of the EU's General Data Protection Regulation (GDPR). This factor extends the GDPR's applicability to data processing activities related to the operations of an EU establishment, even if the processing itself occurs outside the EU.

Text of Relevant Provisions

GDPR Art.3(1):

"This Regulation applies to the processing of personal data in the context of the activities of an establishment of a controller or a processor in the Union, regardless of whether the processing takes place in the Union or not."

Analysis of Provisions

Article 3(1) of the GDPR establishes that the regulation applies to data processing activities carried out "in the context of the activities of an establishment of a controller or a processor in the Union". This provision significantly broadens the territorial scope of the GDPR, as it focuses on the connection between the data processing and the activities of an EU establishment, rather than the location of the processing itself.

The key elements of this provision are:

1. The existence of an "establishment" in the EU
2. Processing occurring "in the context of the activities" of that establishment
3. Application "regardless of whether the processing takes place in the Union or not"

The concept of "establishment" is interpreted broadly, as clarified in Recital 22 of the GDPR, which states that "[e]stablishment implies the effective and real exercise of activity through stable arrangements. The legal form of such arrangements, whether through a branch or a subsidiary with a legal personality, is not the determining factor in that respect". This means that even a minimal presence in the EU could potentially constitute an establishment if it involves real and effective activity.

The phrase "in the context of the activities" is also interpreted expansively. According to the European Data Protection Board (EDPB) guidelines, there needs to be an "inextricable link" between the processing activities and the activities of the EU establishment. This link is assessed on a case-by-case basis, considering factors such as revenue raising in the EU and the relationship between the non-EU entity and its local EU presence.

The final part of the provision, "regardless of whether the processing takes place in the Union or not", emphasizes that the physical location of the processing is irrelevant. This extends the GDPR's reach to data processing occurring anywhere in the world, as long as it's connected to the activities of an EU establishment.

Implications

This factor has significant implications for businesses operating globally:

1. Companies with any form of stable presence in the EU must carefully assess whether their data processing activities, even those conducted outside the EU, are linked to their EU operations.
2. Non-EU companies with EU subsidiaries or branches may find themselves subject to GDPR for their global data processing activities if these are related to their EU presence.
3. Revenue-raising activities in the EU could trigger GDPR applicability for associated data processing, even if conducted by a non-EU entity.
4. The broad interpretation of "establishment" means that even minimal presence in the EU (e.g., a single employee or agent) could potentially bring a company's data processing under GDPR scope.
5. Companies must conduct case-by-case analyses of their processing activities to determine GDPR applicability, as some activities may fall under the regulation while others do not.