Christian B, who is the subject of an investigation into the disappearance of the child, had challenged his European arrest warrant issued for another charge of rape in 2005.
The 43-year-old German was extradited from Italy to Germany two years ago on an arrest warrant, and was later convicted of the rape of a 72-year-old American in Portugal.
His legal team challenged the validity of the extradition and a German court sought advice from the Luxembourg-based Court of Justice of the European Union (CJEU).
In a non-binding opinion, the CJEU stated that the German authorities should have obtained permission from Italy for the rape charge.
There will be a final verdict on his appeal at a later stage.
The rape took place in Praia da Luz – the same Portuguese seaside resort where three-year-old Madeleine disappeared two years later.
The little one was on vacation with her family when she disappeared from her bedroom, sparking a search that spanned more than a decade.
Earlier this year, Christian B – whose full name cannot be stated for legal reasons – was revealed as the prime suspect under investigation by a German prosecutor who believes Madeleine is dead.
He was living nearby when Madeleine went missing and phone data suggests he was near the apartment an hour before he was last seen.
The 43-year-old has lived along the Algarve coast for many years and was known to travel regularly between Portugal and Germany.
He is currently serving sentences for rape and drug trafficking in a prison in Kiel, northern Germany.
But his prison term for the drug offense ends in January, and prosecutors fear he will disappear when released.