EU Data Act: cloud switching fees end on 12 January 2027. What SMEs should do now

What is the EU Data Act, and why does it matter when you buy software?

The EU Data Act is Regulation (EU) 2023/2854. It entered into force on 11 January 2024, its switching rules have applied since 12 September 2025, and the ban on switching fees takes effect on 12 January 2027. (xictron)

The switching rules exist to reduce vendor lock in. They make it easier to move to another provider of the same kind of service, back to your own infrastructure, or to several providers at once. (Alston & Bird)

This matters for your costs. When leaving a vendor is slow and expensive, the vendor holds the stronger hand at renewal. And renewals are where prices go up: 79% of IT leaders faced a price increase at SaaS renewal in the past 12 months, according to Zylo's 2026 SaaS Management Index. (Zylo)

Which services does it cover?

The rules cover "data processing services": cloud infrastructure, platforms and software delivered as a service, plus storage and database services. (web60) For a typical SME, that can include your CRM, accounting system, file storage and website or app hosting, when you buy them as cloud services.

• Where the provider is based does not matter. The rules apply to every provider serving customers in the EU, wherever the provider is established. (Nordia Law)
• Where you are based does. The switching obligations apply to contracts with customers based in the EU. (Mishcon de Reya)
• Custom built services are partly exempt. A service mostly built for one customer, and not offered broadly through the provider's catalogue, is exempt from several rules, including the rules on switching charges. (Nordia Law)

What changes on 12 January 2027?

Switching fees disappear. Article 29 of the Data Act removes them in two stages. (wz-it)

A switching charge is any charge for the switching steps the Data Act requires, data egress included, other than standard service fees or early termination penalties. (xictron) That exception matters, and the section below covers it.

What are your switching rights today?

You already have them: the switching rules have applied since 12 September 2025, and your contract must spell them out in writing before you sign. (Penningtons Manches Cooper) Article 25 sets the timeline. (Springlex, Article 25)

1. Notice. The provider can ask for at most two months' notice before the switch starts.
2. Transition. The switch must then be completed within 30 calendar days, and your contract keeps applying during that time.
   • If 30 days is technically unfeasible, the provider must tell you within 14 working days, justify it, and propose an alternative period of at most seven months.
   • You can extend the transition period once if you need more time.
3. Data retrieval. After the transition, you get at least 30 calendar days to retrieve your data.
4. Erasure. Once the switch is complete and the retrieval period has ended, the provider must erase your exportable data and digital assets.

In the standard case, that is at most about three months from notice to a completed switch. Providers must also publish clear information about their switching process and fees before you sign, including on their websites. (Mishcon de Reya)

What the Data Act does not do

It lowers the cost of leaving. It does not end the commitment you signed, and it does not lower your price.

• Your contract commitment stays. Standard service fees and proportionate early termination penalties are not switching charges, so they remain allowed after 12 January 2027. (wz-it) A multi year renewal signed today can still cost you if you leave early.
• Running providers side by side is different. If you use two providers in parallel rather than switching, egress charges up to cost remain allowed after the deadline. (wz-it)
• Rules for smaller providers may change. Today there is no general exemption for small and medium sized providers. The Commission's Digital Omnibus proposal of 19 November 2025 would add targeted relief for SME and small mid cap providers and for some custom made services, including some older contracts, but it is not law yet. (Saga Compliance)
• That relief would cover older contracts only. It would apply to contracts concluded on or before 12 September 2025, and small mid caps means companies with fewer than 749 employees. (European Commission) Ireland, holding the Council presidency, aims to reach agreement with the European Parliament by the end of 2026. (McCann FitzGerald)

What should you do before 12 January 2027?

Map your contracts now, so the deadline works for you at renewal instead of passing unnoticed.

• List every cloud and software contract with its renewal date, notice period and auto renewal terms.
• Flag contracts that renew before 12 January 2027. Think twice before locking into a long term with early termination penalties right before switching fees disappear.
• Find the switching clause in each contract: notice period, transition period, data retrieval period, and any switching or egress fee.
• If a clause is missing or unclear, ask the provider in writing how it meets the Data Act.
• Ask what early termination penalty applies, and check that it is proportionate.
• Test a data export now, so you know your data comes out in a format you can actually use.
• If a provider charges a switching fee before the deadline, ask for the cost breakdown. It may not exceed the provider's direct costs of the switch.
• Use it at renewal. A tested exit plan and a competing quote are the strongest arguments you can bring to a price negotiation.

Frequently asked questions

Lower switching costs only help if you know your price

The Data Act makes leaving cheaper. It does not tell you whether you pay a fair price today, or whether a competitor would quote less.