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The European Commission has put forward the suggestion as part of a new directive and regulation.
The new rules include users' "right to be forgotten" and an obligation on organisations to report data breaches "as soon as possible".
The boss of one tech-focused organisation described the proposals as a "tax" on firms holding customer data.
The Justice Commissioner, Viviane Reding, said it was important for EU citizens - particularly teenagers - to be in control of their online identities.
"My proposals will help build trust in online services because people will be better informed about their rights and more in control of their information," she said.
The commission says that key changes to the 1995 data protection rules include:
-People will have easier access to their own data, and will find it easier to transfer it from one service provider to another.
-Users will have the right to demand that data about them be deleted if there are no "legitimate grounds" for it to be kept.
-Organisations must notify the authorities about data breaches as early as possible, "if feasible within 24 hours".
-In cases where consent is required organisations must explicitly ask for permission to process data, rather than assume it.
-Companies with 250 or more employees will have to appoint a data protection officer.
The rules would apply to data handled outside the EU if the companies involved offered services to citizens living in the 27-nation zone.
The commissioner said that by simplifying the current "patchwork" of rules and cutting red tape, businesses could expect to save a total of 2.3bn euros ($3bn; £1.9bn) a year.
However, organisations which break the rules face penalties.
The commissioner suggested that companies that charged a user for a data request be fined up to 0.5% of their global turnover. She said that sum should double if a firm refused to hand over data or failed to correct bad information.