Prosecutors alleged the Italian created a system of shell companies to hide extra earnings during his first spell as Real Madrid manager in 2014 and 2015, notably through image rights.
They said the 66-year-old, one of the most successful managers in football history, failed to pay more than one million euros due to undeclared earnings in those years, seeking four years and nine months in jail against him.
Ancelotti denied having intentionally committed fraud at his highly publicised trial in April, saying he never realised a scheme allowing him to collect some of his salary in image rights would see him pay less tax.
A Madrid court announced in a ruling that it had convicted Ancelotti for "an offence against the treasury... to the punishment of one year in prison" and a fine of 386,361 euros ($452,821).
But the former Chelsea, Bayern Munich and Paris Saint-Germain boss, who no longer lives in Spain, will not serve jail time because the sentence is less than two years and he has no criminal record.
The court cleared Ancelotti of the fraud allegation for the 2015 tax year.