The EU executive has previously indicated it wanted law enforcement authorities to be able to access electronic evidence stored within the 28-nation bloc. But the scope of the planned legislation will extend to data held elsewhere, according to two sources with direct knowledge of the matter.
The news comes as a battle between Microsoft and United States nears its climax. This week the Supreme Court will hear arguments in a case where U.S. prosecutors are trying to force the company to turn over emails stored on its servers in Ireland.
Europe's planned law would apply to all companies that do business in the EU. It would also apply to the personal data of people of all nationalities, not just EU countries. The legislation is expected to go before lawmakers at the end of March.
Experts warn this legislation could conflict with existing data protection laws. For example, in the United States companies are not allowed to disclose information to foreign governments and in Europe companies are restricted in how they can transfer data outside the bloc.
Sources tell Reuters that the EU acknowledges such complexities and that the decision to include extra-territorial authority is aimed, in part, to strengthen its hand in negotiating a deal with the United States on the issue.