The 48-year-old princess has not been charged with any crime, but she is a suspect in a pre-trial investigation of allegations of money laundering and tax evasion, the Daily Telegraph reported.
An investigating judge is looking into charges the princess and her husband, Inaki Urdangarin, declared as business expenses for the Aizoon company what were actually personal expenses that were not declared on the couple's income taxes.
Some of the items declared as business expenses include a painting worth $4,000 and a set of Harry Potter books.
Those personal expenses that were charged to the company constituted a "double fraud," the judge has written in a summary of his findings.
"On one hand they were income that she never declared in her income tax, and on the other, it lowered the company tax because they were considered operating expenses without being so," he said.
Urdangarin, the Duke of Palma, is already facing charges he embezzled $8.1 million in public funds when he was the head of a not-for-profit organization in the Balearic Islands.
The four-year-long investigation has damaged the reputation of the royal family and led to to demonstrations against the monarchy, Euronews reported.
The princess was met at the courthouse in Palma by about 200 loud protesters waving the Republican flag and carrying anti-monarchy signs.