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Germany would only extradite the former Catalan president Carles Puigdemont to Spain on a charge of misuse of public funds, not the more serious charge of rebellion, a court has ruled.

The separatist leader was held on a European arrest warrant in March while crossing into northern Germany on the way to Brussels, where he was living in self-imposed exile.

Spanish courts want Puigdemont to go on trial for rebellion, sedition and misuse of public funds for organising an illegal referendum in Catalonia that led to a unilateral declaration of independence in October, with the former charge potentially leading to a prison sentence of up to 25 years.

On Thursday morning, the higher court in Schleswig-Holstein authorised Puigdemont’s extradition to Spain on the lesser charge of misuse of public funds, but rejected a request to send him back on grounds of rebellion.

A spokeswoman for the court said: “The court decided this morning that an extradition due to the accusation of misuse of public funds is permissible.”

The court thus rejected the German state prosecutor’s argument that the Spanish charge of “rebellion” could be equated with the German penal code’s charge of “high treason”.

The ruling means Puigdemont, who initially moved to Berlin after being released on bail in April and later relocated to Hamburg, will not have to go on trial for rebellion in Spain if he is extradited via Germany.

The Spanish deputy prime minister, Carmen Calvo, said Madrid would not comment on “what pertains to Spanish justice nor that of another country such as Germany”.

But Esteban González Pons, a spokesman in Europe for the rightwing Popular party, called on the government to suspend Spain’s membership of the Schengen agreement on freedom of movement “until it’s clarified whether Euro detention orders are of any use”.

Albert Rivera, the leader of the centre-right Citizens party, said it was regrettable that Euro orders seemed to be “an instrument for the benefit of fugitives”.

Meanwhile, Quim Torra, the Catalan president, said: “This is great news. Once again it expose the tricks and lies of a judicial process that should never have been initiated. Europe is where we will win.”

According to Reuters, a source close to Puigdemont’s legal team said he would nonetheless appeal against a decision to extradite him from Germany on any charge.

His German defence team said: “The higher regional court Schleswig has rejected the request for the extradition of Carles Puigdemont on the charge of rebellion. Therefore, as the court has explicitly determined, he cannot be prosecuted in Spain for the offence of rebellion.

“However, against his extradition on charges relating to the costs of the independence referendum, the court has no legal objections.

“Puigdemont is only being sought for criminal prosecution by the Spanish authorities because he enabled a democratic referendum to take place as instructed by his voters.

“We are convinced that Germany should not play any part in the criminalisation of democratic acts of this kind, and that it should stay out of the highly charged domestic disputes of other states. For these reasons, we will be immediately reviewing the next steps in the procedure.”

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