Nicolas Sarkozy has been placed under investigation over alleged irregularities in his 2012 re-election campaign finances, dealing a serious blow to his hopes of running again for the French presidency in 2017.

Sarkozy was questioned by magistrates at the Paris financial prosecutor’s office before being notified that he was under investigation for “suspected illegal financing of an election campaign for a candidate, who went beyond the legal limit for electoral spending”, the prosecutor said on Tuesday.

The move is a prelude to a possible trial and, although it does not lead automatically to prosecution, it means Sarkozy is likely to be tied up in legal proceedings for months to come, making it hard for him to stand in a centre-right primary in November before next year’s presidential election.

Sarkozy, 61, the leader of the conservative opposition Republicans party, led France from 2007 before losing to Socialist Francois Hollande in 2012. He has repeatedly denied knowledge of dual accounting and the discovery of €18m (£14m) in false invoices issued by the Bygmalion event-organisation company that meant his campaign costs were more than double the legal limit.

Four senior figures in the 2012 campaign have already been placed under investigation for alleged political financing offences, including his campaign manager and treasurer, as well as four former Bygmalion executives.

Thierry Herzog, Sarkozy’s lawyer, told reporters he would appeal against the decision, but the maximum penalty he could face was a fine of €3,700.

He said Sarkozy had not been placed under investigation in the more serious Bygmalion affair, for which he was given the status of a legally assisted witness. That means magistrates do not see grounds to prosecute him in the case for now.

“I can say that I’m satisfied that the law in large part has been kept to and there was nothing linking Nicolas Sarkozy to the Bygmalion case,” Herzog said. “It is only about exceeding the amount of campaign spending.”

Nevertheless, it throws the presidential race wide open at a time when former prime minister Alain Juppé has taken a solid lead in opinion polls over at least six other declared contenders for the centre-right nomination, with more expected to enter the contest soon.

The winner of the primary is likely to face François Hollande, the incumbent Socialist president, and far-right anti-immigration populist Marine Le Pen – although Hollande has not announced whether he will run again.

Sarkozy’s ambitions have not been helped by a series of scandals, including allegations that he used money from late Libyan dictator Muammar Gaddafi to fund his 2007 campaign, that he was involved in kickbacks from an arms deal in the 1990s, and that he tried to bribe a magistrate to get information on another corruption case.

The Bygmalion case could prove the most damaging, especially after the investigation found that Sarkozy asked for more campaign events in mid-March 2012, around two months before the vote.

Questioned by police in September 2015, the former president said he did not remember the warning, and described the controversy as a “farce”. His campaign director, Guillaume Lambert, has told police he warned Sarkozy of the risk of breaching financing limits.

In a book published last month, Sarkozy wrote: “It will no doubt be hard to believe, but I swear it is the strict truth: I knew nothing about this company until the scandal broke.”