One might think that setting the correct locale would do the trick with for example german umlauts, but this is not the case. You have to use mb_strtoupper() instead:

<?php

setlocale(LC_CTYPE, 'de_DE.UTF8');

echo strtoupper('Umlaute äöü in uppercase'); // outputs "UMLAUTE äöü IN UPPERCASE"
echo mb_strtoupper('Umlaute äöü in uppercase', 'UTF-8'); // outputs "UMLAUTE ÄÖÜ IN UPPERCASE"

?>