Former Olympic handball player Inaki Urdangarin, 50, is married to King Felipe VI's sister, Princess Cristina, but was sidelined from the royal family after the fraud scandal erupted in 2010.
The scandal contributed to the decision of Felipe's father Juan Carlos I to abdicate in 2014.
Urdangarin was found guilty last year of taking millions of euros (dollars) between 2004 and 2006 from a non-profit foundation he headed in the island of Majorca.
He will now go to jail unless he makes a successful final appeal to the Constitutional Court -- a possibility regarded as unlikely.
He lost his overall appeal on Tuesday, though the court overturned some of the lesser charges. That left him with a slightly shorter sentence than six years and three months he received last year.
Stripped of title
The corruption scandal sparked outrage during Spain's financial crisis when Urdangarin came to be seen as a symbol of the elite's perceived corruption.
The scandal soured the end of Juan Carlos's reign.
He gave up the throne in June 2014 after 39 years, hoping his son Felipe VI could freshen up the image of the monarchy.
Urdangarin and Cristina have been excluded from all of the royal family's official public appearances since late 2011.
Felipe VI stripped the couple of their titles of duke and duchess of Palma. They now live in Switzerland with their four children.
Urdangarin claimed he never made any decisions without the royal family's knowledge.
Cristina herself was also tried on charges that she helped her husband evade taxes, but the 52-year-old princess was acquitted.
She was fined 265,000 euros on separate charges. The Supreme Court on Tuesday also reduced that fine to 136,950 ($161,400) euros on appeal.
Embezzlement, money laundering
Cristina was the first member of Spain's royal family to face criminal charges since the monarchy's restoration in 1975.
Urdangarin was charged with the more serious crimes of embezzlement, influence peddling, forgery and money laundering.
The couple were tried in 2016 along with 15 others, including former government minister Jaume Matas.
After marrying Urdangarin in 1997, Cristina was constantly in the celebrity spotlight and won praise for having a salaried job.
But eventually, eyebrows were raised at the couple's lavish lifestyle.
In 2004 they purchased a 1,200-square-metre (13,000-square-foot) house for six million euros in Barcelona.
The royal family has not commented on Urdangarin's conviction.
Reacting to Tuesday's ruling, a palace source said only that it had the "greatest respect for the independence of the judiciary".
There is said to be no precedent of Spain's Constitutional Court upholding an appeal against a conviction with a jail term of more than five years.
"We can expect that (Urdangarin) will go to prison," said Ana Romero, author of a book on the royal family under Felipe's father Juan Carlos I.
If Urdangarin did not go to jail, she added, "the reaction would be very negative for the crown... People would say he was not going to prison because he is the king's brother-in-law."
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