A Spanish judge has formalised charges against Princess Cristina, King Felipe’s sister, in a tax fraud and money laundering case.
The princess, 49, was questioned in court in February about the business dealings of her husband, Inaki Urdangarin, and could now face trial.
However, an appeal has been lodged against the decision.
The judge’s ruling will come as an embarrassment to Felipe VI, who came to the throne only six days ago.
The tax fraud case was one of several scandals that weakened the popularity of the Spanish monarchy and prompted the abdication of King Juan Carlos.
Princess Cristina’s appearance in court in Mallorca was unprecedented for the royal family and if she goes to trial, she could face up to 11 years in jail.
She was noticeably absent from Felipe’s proclamation as king.
The judge’s decision is a major development in this investigation and a huge embarrassment for the Spanish royal family.
Jose Castro believes the princess knew more than she has let on regarding the allegedly corrupt activities of her husband, Inaki Urdangarin.
This inquiry has now lasted more than three years and during that time it has heavily eroded the popularity of the royal family. Princess Cristina has already appeared in court to testify, but the door is now open for her to face trial, which would take the scandal to a new level.
Her brother, Felipe, became king less than a week ago. Of the many challenges he faces as the new monarch, this is perhaps the least welcome.
Judge Jose Castro has been investigating allegations that the princess’s husband embezzled millions in public funds with a former business partner.
Mr Urdangarin, who is the Duke of Palma, and Diego Torres were alleged to have received 5.6m euros (£4.6m; $7.5m) by overcharging regional governments for organising sporting events as part of a not-for-profit organisation called Noos.
Money from Noos was allegedly channelled into a company called Aizoon that the duke had set up with his wife. It was then allegedly used to pay for work on the couple’s Barcelona mansion, luxury trips and dance lessons.
Announcing his decision, Judge Castro said the princess should be tried alongside her husband and other suspects.
Princess Cristina told the investigating judge in February she had no knowledge of her company’s activities
“The crimes against the public purse that Inaki Urdangarin allegedly committed against the public purse would have been hard to commit without at least the knowledge and acquiescence of his wife,” he said.
As co-owner of Aizoon, she is suspected of co-operating in tax fraud and money-laundering, although she told the judge in February she had no knowledge of the company’s activities and simply trusted her husband.
Anti-corruption prosecutors had already opposed his decision to name Cristina as a suspect, saying there was insufficient evidence against her. Prosecutor Pedro Horrach said on Wednesday an appeal was being lodged “because there is still no piece [of evidence] against” the princess.
The next step will involve prosecutors and defendants putting forward their case before Judge Castro, Palma de Mallorca’s investigating judge, who will then decide what charges to recommend.
A final decision on whether she should stand trial will be made by the provincial court at Palma de Mallorca.