Data Retention Periods

In the digital age, data has become one of the most valuable assets for organizations. However, with this value comes great responsibility: the proper management of information, especially regarding its retention and deletion. Data retention periods are a critical aspect of information privacy and security, and failure to comply with them can have serio us legal, financial, and reputational consequences. In this article, we will explore in depth what data retention periods are, why they are important,
how they are determined, and best practices for meeting them.

What are data retention periods?

Data retention periods refer to the period of time an organization must store certain types of information before proceeding with its deletion or secure destruction. These periods are not arbitrary; they are defined by laws, regulations, industry standards, and, in some cases, by the organization’s internal policies.

Data retention not only involves storing information, but also ensuring that it remains accessible, intact, and protected for the required period. Once the retention period expires, the data must be securely disposed of to avoid privacy or security risks.

Why are data retention periods important?

• Legal and regulatory compliance: Data protection laws, such as the General Data Protection Regulation (GDPR) in the European Union, establish specific requirements for how long personal data can be retained. Failure to comply with these periods can result in significant fines and penalties.

• Protection against security risks: Data that is no longer needed but is improperly retained can become a target for cyberattacks, information leaks, or unauthorized access.

• Maintaining customer trust: Users trust organizations to handle their data responsibly. Meeting retention periods reinforces this trust and demonstrates a commitment to privacy.

How are data retention periods determined?

Retention periods are not uniform; they vary by data type, jurisdiction, and industry.

The key factors that influence their determination are listed below:

1. Specific regulations:

Different laws establish specific periods for certain types of data. For example, we have:

• The GDPR establishes that personal data should only be retained for as long as necessary to fulfill the purpose for which it was collected.

• In the area of Human Resources:

o Contracts, data on temporary workers, and severance pay documentation, according to the Law on Infractions and Sanctions in the Social Order, must be retained for 5 years.

o Employee payroll records must also be retained for a period of 5 years in terms of civil liability for potential claims from employees or former employees.

• Regarding clients:

o Invoices must be kept for 10/15 years according to accounting regulations, the Commercial Code, VAT regulations, the Legal Information System (LIS), and the Money Laundering Law.

o Contracts between clients must be kept for 5/10/15 years according to the Civil Code, the Money Laundering Law, and the Criminal Code.

• Regarding suppliers:

o Invoices must be kept for 10 years according to the Criminal Code, accounting regulations, the Commercial Code, VAT regulations, and the Legal Information System (LIS).

o Contracts must be kept for 5 years according to the Civil Code.

• Regarding video surveillance and access control:

o Video surveillance must be kept for 30 days according to the Video Surveillance Instruction.

o Visitor lists must be kept for 30 days according to the Building Access Control Instruction.

• Regarding accounting data:

o Accounting books and documents, financial statements, audit reports, shareholder and board of directors agreements, company bylaws, minutes and records, and documents related to subsidies will
be kept for a period of 6 years according to the Commercial Code and the General Subsidies Law.

• Regarding tax matters:

o Company administration records, rights and obligations related to the payment of taxes will be kept for 10 years according to the General Tax Law and the Criminal Code.

o Information on intragroup pricing will be kept for 18 years; intragroup transactions for pricing agreements will be kept for 8 years according to the Corporate Tax Law.

o Administration of dividend payments and tax withholdings will be kept for 10 years according to the General Tax Law.

• Regarding Health and Safety:

o Employee medical records will be kept for 5 years according to the Law on Infractions and Sanctions in the Social Order.

• Regarding purchases:

o Records of all deliveries of goods or services, intra-community acquisitions, imports, and exports for VAT purposes must be kept for 5 years according to the Civil Code.

2. Purpose of processing:

The retention period must be aligned with the purpose for which the data was collected. For example, customer data for a business transaction may be retained for as long as necessary to manage the product warranty, but not indefinitely.

3. Contracts and legal obligations:

In some cases, retention periods may be defined by contracts with customers, suppliers, or business partners. For example, a service contract may require certain data to be retained for the duration of the agreement and for a few years afterward.

4. Operational needs:

Organizations can set retention periods based on their own operational needs, as long as they do not conflict with applicable laws. For example, a company might decide to retain employee data for 5 years after the end of their employment to handle
potential claims.

5. Sector criteria:

Some sectors have specific regulations. For example, in the banking sector, transaction records must be retained for longer periods to comply with anti-money laundering regulations.

Managing Data Retention Periods

Managing data retention periods is not a simple task. Some of the main challenges include:

1. Regulatory Complexity:

Organizations operating in multiple jurisdictions must comply with a variety of laws and regulations, which can result in conflicting retention periods.

2. Data Volume:

With the exponential growth of data, identifying which data should be retained and which should be deleted can be overwhelming.

3. Outdated Technology:

Some organizations still rely on legacy systems that are not designed to manage retention periods efficiently.

4. Lack of Awareness:

In many organizations, employees are not sufficiently informed about the importance of retention periods, which can lead to data management errors.

Best Practices for Complying with Data Retention Periods

To ensure compliance with data retention periods, organizations can adopt the following best practices:

1. Conduct a data inventory:

Identify the lifecycle of the personal data we collect, what types of data are collected, where they are stored, their purpose, whether there are data transfers, and their destruction. This inventory is the first step in determining applicable retention periods.

2. Establish a data retention policy:

Develop an internal policy that defines retention periods for each type of data, based on applicable laws and operational needs.

3. Automate processes:

Use data management tools that automate data deletion once the retention period expires. This reduces the risk of human error.

4. Train staff:

Ensure all employees understand the importance of retention periods and how to apply them in their daily work.

5. Audit Regularly:

Conduct periodic audits to verify that retention periods are being met and that data is being disposed of securely.

6. Document Everything:

Keep detailed records of decisions related to data retention and deletion. This can be useful in the event of an inspection or audit.

7. Collaborate with Experts:

Consult with data protection attorneys and compliance experts to ensure that retention policies are aligned with applicable laws.

Consequences of Non-Compliance:

Failure to comply with data retention periods can have serious consequences, including:

• Fines and Penalties: Data protection authorities can impose significant fines. For example, under the GDPR, fines can reach up to 4% of a company’s annual turnover.

• Reputational Damage: Privacy breaches can damage an organization’s reputation and erode customer trust.

• Legal risks: Retaining data beyond the required period can expose an organization to lawsuits or claims.

• Unnecessary costs: Storing outdated data increases storage and management costs.

Conclusion

Data retention periods are a fundamental aspect of information management in the digital age. Meeting these deadlines is not only a legal obligation but also an essential practice to protect privacy, optimize resources, and maintain customer trust. Organizations must take a proactive approach, implementing clear policies, using appropriate technology, and training their staff to ensure data is retained and disposed of responsibly. In a world where data is increasingly valuable, proper data management is key to the success and sustainability of any organization.

Author: Mariona Heredia, Lawyer.

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