The European Court of Justice (ECJ) has ruled that Uber is officially a transport company and not a digital service.
The controversial ride-hailing firm argued it was an information society service - helping people to make contact with each other electronically - and not a cab firm.
Uber had been told to obey local taxi rules in Barcelona, which prompted the court case.
Despite arguing the case, Uber said the verdict would make little difference to the way it operated in Europe.
An Uber spokesperson told the BBC: '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. As our new CEO has said, 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.'
In its ruling, the ECJ said Uber must be classified as 'a service in the field of transport' in EU law.
It added: 'As EU law currently stands, it is for the member states to regulate the conditions under which such services are to be provided in conformity with the general rules of the treaty on the functioning of the EU.'
TUC general secretary Frances O'Grady said the verdict meant Uber must 'play by the same rules as everybody else'.