Uber provides a transport service and must be licensed, an adviser to the European Union's top court said on Thursday.
The opinion means the smartphone app can be regulated by European countries as a transport service, subjecting it to local licensing regulations which could have been considered disproportionate under EU law had it been deemed an "information society service".
"The Uber electronic platform, whilst innovative, falls within the field of transport: Uber can thus be required to obtain the necessary licenses and authorizations under national law," the statement from the Court of Justice of the European Union (ECJ) said.
While the opinion is non-binding, the court's judges follow it in most cases.
The case was brought by an association of Barcelona taxi drivers who argued that Uber engaged in unfair competition with its UberPOP service - which used unlicensed drivers.
Uber said it would await a final ruling later this year, but added that even if it is considered a transportation company, this "would not change the way we are regulated in most EU countries as that is already the situation today".
However, such a ruling would "undermine the much needed reform of outdated laws which prevent millions of Europeans from accessing a reliable ride at the tap of a button," an Uber spokeswoman said.
Uber, which allows passengers to summon a ride through an app on their smartphones, expanded into Europe five years ago.
But it has been challenged in the courts by established taxi companies and some EU countries because it is not bound by strict local licensing and safety rules which apply to some of its competitors.