Revocation of a car rental licence – strict stance against entrepreneur unreliability

The administrative courts in Baden-Württemberg confirm consistent action by the authorities in revoking a car rental licence.

Thecar rental traffichas been in a state of tension for years between conventional taxi services, new mobility services and digital intermediary platforms. Central to this are thelicensing requirement, thereturn-to-base obligationand theprohibition on picking up passengers en route– regulations which many operators, but also users, regard as "outdated", but which are consistently defended by the case law as pillars of the Passenger Transport Act.

We have already reported on a decision of the Administrative Court of Düsseldorf concerning a dispute over a car rental licencehere. However, the courts in Baden-Württemberg are also dealing with this issue.

By way of a decision dated4 November 2025 (VGH Baden-Württemberg, 13 S 1530/25), the 13th Senate has sharpened this line once again. At the centre is therevocation of a car rental licence(also referred to as a car rental licence)on grounds of unreliabilityand itsimmediate enforcement. The decision is of considerablepractical relevancefor all car rental operators, platform providers and start-ups in the field of individual passenger transport.

Legal and factual circumstances for the car rental licence

The starting point is thePassenger Transport Act (PBefG), which in §§ 2, 13 and 25 PBefG sets out the essential requirements for thegranting and revocation of licences. For car rental operators, the following is particularly decisive:

• Without alicence pursuant to § 2 Abs. 1 PBefG, no paid transportation of persons is permissible.
• The licence is only granted if, inter alia, thereliability of the operator(§ 13 Abs. 1 S. 1 Nr. 2 PBefG i. V. m. § 1 PBZugV) is present.
• If this reliability is absent or ceases to exist at a later date,the car rental licence mustbe revoked pursuant to § 25 Abs. 1 PBefG.

Thereliabilitydoes not depend solely on criminal misconduct. Already anaccumulation of serious regulatory violations, systematic breaches of the law or demonstrative disregard for administrative requirements can be sufficient. TheOccupational Access Regulation for Road Passenger Transport (PBZugV)stipulates thatserious breaches of the PBefGor its ordinances are typical indicators of unreliability.

In the field ofcar rental vs. taxifixed legal guardrails have emerged:

• thereturn-to-base obligationof the car rental vehicle to the operating base after each journey (§ 49 Abs. 4 S. 3 PBefG),
• theprohibition on carrying out orders accepted en route (§ 49 Abs. 4 S. 2 PBefG),
• the prohibition of any risk of confusion with taxi traffic (§ 49 Abs. 4 S. 5 PBefG).

These provisions have been classified by case law for years – also taking into account EU law and freedom of profession (Art. 12 GG) – as constitutional and Union law compliant, Passenger transport therefore remains a heavily regulated market, in which breaches by car rental companies can quickly lead to the loss of the car rental permit. This can endanger the company's existential foundation.

The decided case: Car rental company with 'taxi' appearance and serious breaches

The VGH decision concerns a company that formally operated a car rental service but in fact:

• carried out numerous journeys without a permit both before and after the issuance of the car rental permit,
• continued to operate even after the immediately enforceable revocation,
• used the designation 'taxi' extensively in internet presences, social media, vehicle markings and invoicing forms,
• was clearly perceived from the customer's perspective as a taxi company,
• did not maintain a proper business premises, but instead used a mere 'letterbox solution',
• breached the return duty and the prohibition of picking up passengers along the route to a considerable extent.

These breaches continued even during ongoing proceedings. Notices from the authorities and earlier notices could not change the behaviour. The entrepreneur argued, among other things, that she did not want to abandon 'regular customers' and had to serve an 'underserved market' – arguments which the VGH classified as legally irrelevant and partly as mere pretextual statements.

Unreliability due to overall conduct and persistent breaches of law

The VGH affirms the unreliability pursuant to § 13 Abs. 1 S. 1 Nr. 2 PBefG i. V. m. § 1 PBZugV in a comprehensive overall appraisal of the conduct.

Central is the Senate's observation:

25 Abs. 1 PBefG covers cases of initial unreliability that may already be present if it remains undetected at the time of permit issuance.

The revocation of a car rental permit is thus a special statutory, mandatory instrument of hazard prevention – and not merely a discretionary decision like the withdrawal under general administrative procedural law.

The unreliability is here essentially based on:

• persistent breaches of the permit requirement,
• an appearance 'like a taxi company' in clear disregard of the demarcation provisions,
• breaches of § 49 Abs. 4 PBefG, which the VGH expressly designates as 'core duties of a car rental operator',
• indications of a sham business premises,
• continued activities despite administrative measures, refusals and revocations.

The VGH classifies this conduct as an expression of lack of legal compliance – and thus as incompatible with the role of a reliable entrepreneur in passenger transport law.

Obligation to return to base, order acceptance and risk of confusion – central compliance points

The court is particularly emphatic in its assessment of the obligation to return to base and the prohibition on picking up passengers en route. These requirements are not a "bureaucratic anachronism", but rather constitute the mandatory dividing line between taxi services and hire car services. They specifically prevent hire car companies from acting "like taxis" and undermining the market.

Equally strict is the court's view of the prohibition on risk of confusion with taxis. The use of terms such as "taxi" or taxi-like logos – particularly in domains, social media accounts or on vehicles – is classified as a serious breach. Public perception regularly confirms this, as evidenced by Google reviews or police witness statements.

Immediate enforcement: Public interest also in cases of purely regulatory/economic breaches

The VGH makes clear that a particular public interest in the immediate enforcement of the revocation of a hire car licence does not only exist in cases of danger to life and limb. Serious economic and regulatory breaches in the area of passenger transport law obligations can also justify immediate enforcement.

The decisive factors are:

• The applicant exhibited repeated breaches of regulations,
• there was a high risk of further non-compliance,
• and there was a threat of significant market distortion to the detriment of law-abiding taxi and hire car companies.

The interference with freedom of profession was moreover limited, because only the self-employed activity as a hire car operator was affected – not any other professional activity of the parties involved.

Classification and practical consequences

The VGH's decision demonstrates:

The requirements for reliability in passenger transport law continue to be interpreted strictly. Hire car companies must consistently comply with the structural requirements of the PBefG otherwise the revocation of the hire car licence threatens – often coupled with immediate enforcement.

In practice, this means, among other things:

• critical review of the operating base model,
• complete compliance with regard to order acceptance and logbook keeping,
• clean public presentation with no reference whatsoever to taxi services,
• clear internal structures, documentation and training,
• early and professional response to regulatory notices.

Conclusion and recommendation

The VGH Baden-Württemberg's decision makes unmistakably clear that the State in the field of hire car services consistently takes action against unreliable operators. Regulatory breaches are not treated as minor offences, but can lead within a short period of time to the revocation of the hire car licence and thus to the deprivation of the economic foundation conduct.

If you are a car rental operator, developing a mobility concept or need to defend yourself against administrative measures, you should review your legal and factual structures as early as possible .

The experts at AVANTCORE Rechtsanwälte in Stuttgart specialise, among other things, in administrative law and advise you on: and advise you on:

• the legally secure design of your business model,
• proceedings concerning approval, revocation or conditions,
• strategic steps vis-à-vis administrative and judicial authorities.

Contact us before a proceeding escalates – early advice often prevents greater economic damage.