The EU’s highest court has ruled that Uber is a transport company, in a decision that opens the US ride-hailing app to tougher national regulation in Europe’s 28 member states.

In a long-awaited judgment, the European Court of Justice said Uber operated in the EU like a traditional taxi firm, shifting its legal status from a digital company and giving it less freedom from regulation in the EU’s single market.

The final ruling from Luxembourg judges, which cannot be appealed, follows a preliminary ECJ opinion earlier this year that said, despite its use of mobile technology, Uber was more than a “mere intermediary” for customers trying to hail a cab.

Uber “must be classified as ‘a service in the field of transport’ within the meaning of EU law”, said the ECJ’s judges on Wednesday. “Member states can therefore regulate the conditions for providing that service.”

Uber has long argued its business – which connects drivers and customers through an app – should be classified as an “information society service” rather than a traditional taxi operation, allowing it to benefit from looser EU digital single market rules. But today’s judgment means the EU’s 28 governments are free to impose tougher transport regulations on Uber, forcing it to comply with rules like any other mini-cab or taxi firm in Europe.

The court also found that Uber was “indispensable for both the drivers and the persons who wish to make an urban journey”. The company “exercises decisive influence over the conditions under which the drivers provide their service” said the judges.

Uber has played down the implications of the judgement which looked at its peer-to-peer taxi service UberPOP that connects drivers without commercial car licenses to riders. The service, which was originally challenged by a taxi drivers’ association in Barcelona, the Asociacion Profesional Elite Taxi, currently operates only in Poland, the Czech Republic, Slovakia and Romania.

Uber has since relaunched the peer-to-peer system as a regulated taxi and private hire business in other European cities including Madrid and Berlin. The company also already operates under national transport laws in some of its biggest markets like France, the UK and Germany.

A spokesperson for Uber said: “This ruling will not change things in most EU countries where we already operate under transportation law. However, millions of Europeans are still prevented from using apps like ours.”

“It is appropriate to regulate services such as Uber and so we will continue the dialogue with cities across Europe. This is the approach we’ll take to ensure everyone can get a reliable ride at the tap of a button”.

The ECJ’s decision paves the way for national regulators to introduce stricter employment or tax laws on technology companies such as Uber that offer traditional services. Until now governments have been asked to prove to the European Commission that any restrictions on tech companies like Uber are “reasonable” and “proportionate”.

The ruling comes after Uber has faced a backlash from regulators in some of its biggest European markets. In London, Uber’s license renewal was rejected in September over safety concerns. – Copyright The Financial Times Limited 2017