By Fiona Ortiz and Rodrigo De Miguel
MADRID, Jan 7 (Reuters) - Princess Cristina, the younger daughter of Spain's King Juan Carlos, has been charged with tax fraud and money-laundering, piling further scandal on the once-beloved but increasingly unpopular royal family.
Palma de Mallorca Examining Magistrate Jose Castro said in a 200-page ruling after a lengthy investigation that there was evidence that Cristina, 48, had committed crimes.
He summoned her to appear in court on March 8, possibly paving the way for an unprecedented trial of a Spanish royal.
The princess's defence lawyer, Miguel Roca, told Spanish television he would appeal the summons, saying "I am absolutely convinced of her innocence".
Her husband, former Olympic handball player Inaki Urdangarin, was earlier charged with fraud, tax evasion, falsifying documents and embezzlement of 6 million euros ($8 million) in public funds through his charitable foundation, which put on sports business conferences in Mallorca and elsewhere in Spain. Urdangarin has denied any wrongdoing.
The case is one of many high-level corruption scandals in Spain that have undermined faith in public institutions at a time of economic crisis marked by deep cuts in public spending.
Opinion of the royal family in particular has sunk to its lowest level ever.
A Sigma Dos poll published on Sunday showed almost two thirds of Spaniards want King Juan Carlos to abdicate after 38 years on the throne and hand over to Prince Felipe, who is still well regarded and is not implicated in his sister's case.
Juan Carlos became king with the restoration of the monarchy in 1975 following the death of the dictator General Francisco Franco. He won respect from Spaniards for his role in the transition to democracy, notably his actions in foiling a coup attempt in 1981.
But various scandals, shows of extravagance, and incidents such as an elephant-hunting trip to Africa at the height of the crisis in 2012 have tarnished his standing along with the Urdangarin affair.
While they have been under investigation, Princess Cristina and her husband have ceased to participate in public appearances. She and the couple's four children moved last year to Geneva where she works for a Spanish bank's charity. Urdangarin remains in Spain.
The case is centred on Urdangarin's non-profit Noos Foundation. He is accused of using his connections to win public contracts to put on events in Mallorca and elsewhere in Spain. Judge Castro has said there is evidence the foundation overcharged for organising conferences and hid the proceeds abroad.
In his ruling, Castro detailed dozens of personal items the princess paid for - from Harry Potter books to home redecorations - out of a shell company the judge said was used to launder proceeds from the Noos Foundation.
"These sums were used on strictly personal spending...And they should have been declared in income tax statements... But it is evident that neither Inaki Urdangarin nor Mrs. Cristina de Borbon ever did so, which means they repeatedly defrauded the tax authority," he wrote in his ruling.
However, the judge also said it was not clear whether the princess had evaded more than 120,000 euros in taxes a year, the division between an infraction and a felony.
The charges brought on Tuesday are known as an "imputacion" in Spanish, and could be thrown out before trial.
An "imputacion" is not as strong as an indictment that would immediately precede a trial, but it is more significant than a subpoena of an accused party because the judge argues there is evidence of specific criminal activity.
Castro, who opened his investigation into the royal couple three years ago, has struggled to make charges stick against Princess Cristina.
In April last year he ruled there was evidence she had aided and abetted Urdangarin. A higher court threw out those charges in May, saying the evidence was not sufficient, but gave Castro more time to investigate alleged tax fraud.
In bringing the new charges, Castro went against the recommendations of the anti-corruption prosecutor on the case, who has argued there was not evidence she committed crimes.
In Spain, the prosecutor and the judge on a case carry out separate investigations and may disagree on proceedings.
Activist anti-corruption group Clean Hands has filed a criminal complaint against Princess Cristina, and is a party to the judicial investigation. The group disagreed with the public prosecutor and recommended the judge bring criminal charges.
In Spain, civic groups can force prosecutors and judges into action by filing criminal lawsuits known as "people's accusations". Clean Hands has spurred action on several ongoing corruption cases in Spain, by filing this sort of lawsuit. (Additional reporting by Jesus Aguado; Editing by Angus MacSwan)
Our Standards: The Thomson Reuters Trust Principles.