MADRID — A Spanish court on Friday upheld tax fraud charges against Princess Cristina, who has been entangled in a corruption case centered on whether her husband and his business associates embezzled millions of euros in public funds earmarked for sports events.

While leaving the tax charges intact, the High Court of Palma, on the Mediterranean island of Majorca, agreed to drop the more serious money laundering charges that were also filed against her in June, making it possible that the princess could settle the case by paying back taxes.

The court’s decision dashed the royal household’s hopes of containing the damage solely to the reputation of Cristina’s husband, Iñaki Urdangarin. Mr. Urdangarin has been under investigation for years, caught up in a fraud scandal that coincides with several other political corruption cases that have shaken the institutional foundations of Spain.

The investigation has already lasted three years, but it now comes after Cristina’s brother ascended to the throne in June as King Felipe VI, succeeding his father, King Juan Carlos. In his proclamation speech, Felipe promised lawmakers integrity and transparency, as part of “a renovated monarchy for a new time.”