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Software companies in Europe urged to review their export control classifications

Software companies across Europe should "re-assess their current export control classifications" in light of EU regulations that recently came into force, an expert has said.21 Dec 2017

Dublin-based Dermot McGirr of Pinsent Masons, the law firm behind Out-Law.com, who specialises in export control compliance, said that a European Commission delegated regulation, which has updated the EU 'dual-use' export control list and came into force on 16 December, should spur the review.

Dual-use items are goods, software or technology which can be used for civil and military purposes. Encryption software, for example, is subject to export controls because it is capable of dual-use: although such software can be used to ensure the confidentiality of information for common commercial transactions, it can also be used for illicit purposes.

The delegated regulation, finalised by the Commission in September, contains major changes to rules in relation to the export of encryption software and technology.

Further changes in respect of exceptions to 'controlled items' under the Dual-Use Regulation were also set out. These changes mean that some organisations that previously were able to rely on an exception to the requirement to obtain an export authorisation may no longer benefit from that exception, or may need to rely on another exception.

McGirr said the amendments are of particular interest to software companies based in Ireland. Many of Europe's biggest software companies are based in the country.

"There are certain exceptions to the export control regime and the requirement to obtain an export licence that software companies regularly rely on," McGirr said. "Some of these exceptions have changed by virtue of the new regulation and certain new exceptions have been introduced. For this reason, software companies and exporters of products that contain software may need to re-assess their current export control classifications."

"If companies export their products illegally, the Irish government's Department of Business, Enterprise and Innovation can levy fines of up to €10 million and / or can put the officers of the company forward for criminal prosecution, resulting in imprisonment for up to five years," he said.