The new copyright law has been a battleground for two years, with internet rights activists and tech giants opposing the legislation and groups representing artists and large publishers broadly in favor.
Under the new rules, Google and other online platforms will have to sign licensing agreements with musicians, performers, authors, news publishers and journalists to use their work online.
While the legislation does not explicitly state so, it is widely assumed that to conform with the law, online platforms will have to install filters to prevent users from uploading copyrighted material. Opponents say this is technically impossible and will lead to widespread censorship.
The new Copyright Directive now goes to European countries' individual parliaments, which have two years to write it into their national laws.
IMPALA, which represents independent music companies across Europe, praised the directive's final passage and said it would continue to work with its members as it heads back individual parliaments.
"It was a long road and we would like to thank everyone who contributed to the discussion," said IMPALA executive chair Helen Smith. "As a result, we now have a balanced text that sets a precedent for the rest of the world to follow, by putting citizens and creators at the heart of the reform and introducing clear rules for online platforms, "By adopting this landmark text, the EU has proved itself a leader in terms of delivering a fair, open and sustainable internet. This text clarifies the position of platforms, building on European case law. It is a first of its kind, and sets an example for other countries across the globe."