- Royal Decree-Law 3/2018, published on 21 April, allows new VTC authorisations to be denied if they exceed one per thirty taxi licences in the region.
- Regions with delegated powers may set a less restrictive ratio, and vehicles must operate habitually in their own region.
- Like any decree-law, it must be validated by Congress: follow its progress before taking decisions.
The Official State Gazette published on 21 April 2018 Royal Decree-Law 3/2018 of 20 April, which amends the Land Transport Act with respect to the hire of vehicles with driver, known as VTC. The rule took effect the day after publication and was issued under the State’s competence over transport crossing more than one region.
Until now, the rule that there should be no more than one VTC authorisation per thirty taxi licences appeared in a regulation, and case law had questioned it. The Government raises it to the rank of law to provide legal certainty in a conflict that pits the two sectors against each other. According to figures cited at the time, there were about 64,000 taxi licences and about 7,000 VTC authorisations.
What changes
The law provides that new authorisations for vehicle hire with driver shall be denied when the ratio between those existing in the region’s territory and the taxi licences domiciled in that same territory exceeds one per thirty. Regions that have assumed that competence by delegation may change the ratio, provided it is less restrictive.
In addition, vehicles authorised for services throughout the national territory must be used habitually for needs related to the region where the authorisation is domiciled. It is presumed that they are not when twenty per cent or more of a vehicle’s services over three months have not passed, even partly, through that territory. The decree-law is limited to setting the ratio and territorial habituality; other matters, such as terms of hire or municipal regulation of taxis, remain in the hands of other rules and administrations.
Why a decree-law
The Government justified the urgency by the exponential increase in VTC authorisations, which could not have been foreseen and which, according to the preamble, is beginning to affect taxi services immediately, heavily regulated in urban areas. The rule aims to prevent that imbalance from worsening while broader regulation is debated.
The first additional provision provides for an extraordinary meeting of the National Transport Conference, which brings together the Minister for Public Works and regional ministers, to analyse measures to improve competitiveness, competition and coordination between the two services. A decree-law must be validated by Congress within thirty days. A royal decree-law has the force of law from its publication, but may be repealed if Congress does not validate it or be processed as a bill, which allows amendments to be introduced.
What to review
Companies that operate or plan to operate VTC services, and those that hire them for clients or staff, should follow the validation closely and the possible processing as a bill, which could introduce changes. Applicants for new authorisations should check the status of their files.
For taxi licence holders, the rule offers a more stable framework, but the debate on regulation of the sector remains open, also at municipal and regional level. In any case, it is advisable to consult a specialised legal adviser before buying, selling or transferring authorisations. This information is general. Companies that hire VTC operators, for example to transport executives or for events, can review their contracts to check what happens if the conditions of the operator’s authorisation change.
In a sector in transformation, legal certainty is part of the value of each authorisation.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
