Uber’s business model is being challenged on multiple fronts in Europe, as a legislative proposal from the EU and a High Court decision in the UK threaten to sharply drive up its costs.

On Monday, the UK High Court ruled that Uber’s operating model was not compatible with existing transport laws in London. This means that Uber and other ride-hailing operators can no longer think of themselves as a platforms connecting drivers with passengers, but must now operate largely as taxi companies, with obligations to their passengers and to drivers.

For Uber, which has already reclassified its drivers as workers, the ruling could lead to a hefty tax bill. Jolyon Maugham, a tax lawyer who runs campaign group the Good Law Project, said the decision could affect an ongoing dispute over Uber’s potential VAT liabilities, thought to be worth some ￡1.5bn, and its future liability to pay VAT on drivers’ takings. Maugham said the ruling could also prompt HM Revenue & Customs to take a closer look at Uber and other operators’ corporate tax positions.