Urdangarin, 46, is a former Olympic handball player who is married to the king's youngest daughter, Princess Cristina, 48.
Officially known as the Duke of Palma, he is accused of having siphoned off over €8 million in public funds via the charitable Nóos institute.
But Spain's edition of the Huffington Post reported on Tuesday that the Spanish Tax Office's report into Urgandarin's tax fraud was a damning piece of evidence in the case against him.
It could prove conclusive in the long-running investigation and determine whether or not the king's daughter was involved in the crimes allegedly committed by her husband.
The investigation into his alleged embezzlement of public funds has rocked Spain. It is the first time in the country's modern history that a member of its royal family has been formally accused of crimes.
Cristina was a board member of Nóos and was summoned to court earlier this year to give testimony.
The couple's house was impounded as a bond to cover Urdangarin's liabilities and Cristina has left Spain, moving with her four children to Geneva in Switzerland.
To date, no charges have been laid against either Urdangarin or Cristina.
Since the scandal erupted 3 years ago, the popularity of the royal family has plummeted. A recent poll showed that 62 percent of Spaniards were in favour of the abdication of 76-year-old King Juan Carlos, while support for the monarchy in general fell to just under half.