The judgement came at a sensitive time for Prime Minister Mariano Rajoy, whose Popular Party has been rocked by separate allegations of corruption this year.
The judge convicted Carlos Fabra on four counts of tax evasion but acquitted him of accepting bribes and influence-peddling, the court in the eastern province of Castellon said in a written ruling.
Fabra was the leader of the conservative Popular Party in Castellon, part of Valencia, a region now synonymous with claims of political corruption during the Spanish building boom that went bust in 2008.
The party distanced itself from Fabra after today's ruling.
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"Fabra has not held any position in the party for some time," its deputy leader Maria Dolores de Cospedal told reporters.
Fabra held the post of provincial president for more than 20 years until 2010. Corruption charges were brought against him in 2003 and tax evasion charges in 2005.
As president of the Castellon provincial council, Fabra oversaw controversial public spending projects such as the building of an airport which is now derelict, seen as a symbol of bad investments in the boom.
A colourful character who wears dark sunglasses in public to hide an old injury, Fabra stood trial last month along with four other defendants including his ex-wife, Maria de los Desamparados Fernandez.
The trial followed a 10-year investigation into alleged financial irregularities, including tax evasion from 1999 to 2003.