Uber faces a ban in Berlin after the city government ruled the app-enabled taxi service could prove unsafe for passengers.
The Berlin city council decided Uber contravenes passenger safety rules by using “unverified drivers in unlicensed vehicles”.
It also said passengers could be uninsured in the event of an accident.
The ban, issued this week, has yet to come into force pending a response from Uber.
But the company faces a fine of €25,000 for each violation and individual drivers face fines of €20,000.
The Berlin government warned prison sentences could follow the non-payment of fines.
San Francisco-based Uber said it would challenge the decision which it described as “not progressive and seeking to limit consumer choice”.
The company said: “We’re bringing much needed competition to a market that hasn’t changed in years.”
Taxi drivers in Berlin won an injunction against Uber in April. The company has operated in the city since early 2013.
A court in Brussels also issued an order prohibiting Uber from operating in April on the grounds drivers lack the necessary licences.
It was reported this week that Uber is losing money on every ride in San Francisco.
Uber and rival Lyft have accused one another of clogging each other’s networks with fake requests for rides after both companies recently launched car-pooling alongside taxi services.