Flows of personal data from the EU to the UK will continue, after the European Commission adopted two "data adequacy" decisions.
The decisions include a sunset clause, which runs out after four years.
They will be renewed only if the UK ensures an adequate level of data protection, the commission said.
UK firms had been facing making costly alternative plans with EU counterparts to keep data flowing once a post-Brexit transition period expires this month.
The agreement also covers data from countries in the wider European Economic Area.
Didier Reynders, Commissioner for Justice, said the adequacy agreement was, "important for smooth trade and the effective fight against crime".
Welcoming the decision, the UK government said it "plans to promote the free flow of personal data globally and across borders".
"All future decisions will be based on what maximises innovation and keeps up with evolving tech," it added.
John Foster, CBI director of policy, called the agreement a breakthrough. "The free flow of data is the bedrock of the modern economy and essential for firms across all sectors," he wrote.