Prosecutors had opened the case in July, alleging she had used a network of companies, some in tax havens, to cheat the tax office out of 6.6 million euros ($7.09 million) in 2018.
A month later, the so-called Queen of Latin Pop paid 6.6 million euros to settle the debt.
But prosecutors on Wednesday asked for the criminal case to be dropped over "a lack of evidence" and a day later, the court agreed.
While the "Hips Don't Lie" singer had committed "irregularities" in her 2018 tax return, the court said that was "not enough to constitute a (criminal) offence against the tax authorities" and that it found no "intent to defraud" in her conduct.
Pau Molins, one of her defence lawyers, hailed the move, saying it had "put an end to the smear campaign waged by the tax authorities" against Shakira and "proves there was never any fraudulent behaviour on the part of the singer".
And his client was "completely satisfied that (the court) had acknowledged she had not committed any criminal fraud", he added.
The decision means she has only one outstanding administrative case to resolve concerning her income from 2011, when she had spent "a maximum of 70 days in Spain.. not even half the minimum to be considered a tax resident", her legal team said.
Both cases resolved
The court ruling came six months after Shakira settled an earlier tax fraud case, reaching a last-minute settlement with prosecutors on the opening day of her November trial over income she earned between 2012 and 2014.
In that case, prosecutors had sought a jail sentence of over eight years for the singer.
They accused her of defrauding the tax authorities of 14.5 million euros in a case that centred on how much time she was living in Spain. Shakira denied the charges, saying she only moved to Spain full-time in 2015.
By the time the case came to trial, she had already paid 17.45 million euros to settle her outstanding tax debt, prosecutors said at the time.
On the day it opened, that trial — which had been due to run for three weeks and hear from some 120 witnesses — was quickly concluded after she agreed to pay a fine of nearly 7.8 million euros.
At the time she explained she had settled "with the best interest of my kids at heart" because she needed "to move past the stress and emotional toll of the last several years" and focus on her career.
Sing a song of tax woes
Shakira, 47, now lives in Miami with her two sons after splitting from Barcelona football star defender Gerard Pique.
He was himself convicted of tax fraud in 2016 and ordered to pay 2.1 million euros in fines and arrears. His conviction was annulled in 2021 by Spain's Supreme Court.
Last year, Shakira together with superstar Argentine producer Bizarrap won the Latin Grammy for song of the year with a track taking a swipe at Pique — who has since retired from football — in which she accuses him of leaving her with a "debt to the tax office".
"People on my team tried to convince me to change the lyrics, but I'm not a UN diplomat. I am an artist and, above all, a woman," Shakira told Spanish celebrity magazine Hola!
Spain has in recent years cracked down on celebrities, including football stars such as Argentina's Lionel Messi and Portugal's Cristiano Ronaldo, for unpaid taxes.
Both players were found guilty of evasion and received prison sentences that were waived for first-time offenders.
