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Compliance· 6 min read

EU Vendor Management Software: Why Data Residency Matters

For companies operating in the EU, choosing where your business software stores data is not just a preference — it's a compliance consideration. Here's why EU companies should prioritize EU-hosted tools, and what to look for.

Note: This article discusses GDPR data residency considerations in general terms. It is not legal advice. Consult a data protection officer or legal counsel for guidance specific to your situation.

What is data residency, and why does it matter?

Data residency refers to the physical location where data is stored and processed. When you use a SaaS tool, your data lives on that vendor's servers — which may be located in the US, EU, Asia, or distributed across multiple regions.

Under GDPR, transferring personal data outside the European Economic Area (EEA) to countries without an adequacy decision requires specific legal safeguards — most commonly Standard Contractual Clauses (SCCs) or reliance on approved frameworks like the EU-US Data Privacy Framework. This applies even when the transfer happens because you're using a US-hosted SaaS tool.

The practical implication: every US-hosted tool that processes EU personal data creates a cross-border data transfer that must be documented, justified, and covered by appropriate legal mechanisms.

Why your vendor management system specifically matters

Your vendor management system stores detailed information about your business relationships, contracts, and — crucially — your compliance posture. The data it holds often includes:

  • Contact details for vendor employees (personal data)
  • Information about which vendors process employee or customer personal data
  • DPA status and data processing details
  • Financial information (contract values, payment terms)
  • Internal risk assessments

This makes the vendor management tool itself a significant data processor. Choosing where it stores data matters both for your compliance record and for the trust level you can place in the tool.

The risk with US-hosted tools post-Schrems II

The 2020 Schrems II ruling by the European Court of Justice invalidated the EU-US Privacy Shield, leaving Standard Contractual Clauses as the primary mechanism for EU-US data transfers. The court also noted that SCCs alone may not be sufficient when US surveillance laws (like FISA Section 702) could apply.

Since then, EU data protection authorities have issued fines and enforcement actions against companies using US-hosted tools without proper transfer impact assessments. The EU-US Data Privacy Framework (2023) has restored a legal basis for transfers, but it remains politically contested and has been challenged in court.

For EU companies, the simplest path to compliance is choosing EU-hosted tools where personal data doesn't need to leave the EEA at all.

What to look for in EU-compliant vendor management software

EU-based data storage — Data stored in EU/EEA regions — ideally specified by country (e.g., Germany, Ireland, Netherlands)
Clear data processing agreement — The vendor should provide a GDPR-compliant DPA that is easy to sign and covers all relevant processing activities
Sub-processor transparency — Clear disclosure of any third-party services the tool uses and where they are located
Data portability and deletion — Ability to export all data and request deletion — essential for your own GDPR compliance
Security certifications — ISO 27001, SOC 2, or equivalent evidence of organizational security controls
Privacy by design — Data minimization, access controls, and encryption built into the product — not bolted on

The advantage of EU-native software vendors

EU-based software companies are subject to GDPR directly as data controllers themselves. This creates structural alignment between the vendor's own compliance obligations and yours. EU-native vendors typically:

  • Understand GDPR requirements from direct experience operating under the regulation
  • Store data in EU regions by default (not as a premium add-on)
  • Have DPAs and privacy documentation designed around EU law from the start
  • Are not subject to conflicting US government data access requirements

Vendorm8 and EU data residency

Vendorm8 is provided by Kiricode OÜ, an Estonian company. All data is hosted in EU regions. As an EU-based company operating under GDPR, we built data residency compliance into the architecture from the start — not as a retrofit.

This means:

  • Your vendor management data stays in the EU/EEA — no cross-border transfers
  • Our DPA is designed for EU controller-processor relationships
  • We can be listed in your ROPA as an EU-based data processor with clear data residency
  • You don't need SCCs or transfer impact assessments to use Vendorm8

EU-hosted vendor management, from an EU company

Vendorm8 is hosted entirely in EU regions and built by an EU company — straightforward GDPR compliance without the paperwork of cross-border transfers.

Try Vendorm8 Free — 14 Days

Vendor management that stays in the EU

Vendorm8 is €19/month flat, EU-hosted, and built with GDPR compliance in mind from day one.

Start Free Trial — 14 Days

No credit card required. EU data residency included.

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