It is not yet clear whether the opposition Socialists could secure enough backing to topple the conservative Rajoy, as they would need the support of upstart parties Podemos and Ciudadanos.
The case, which relates to the use of a slush fund by the Conservatives in the 1990s and early 2000s to illegally finance campaigns, has plagued Rajoy since he came to power in 2011. He has always denied wrongdoing.
Rajoy, became the first sitting prime minister in Spain to give evidence in a trial when he was called as a witness in the case last year, prompting calls for him to resign.
Twenty-nine people related to the PP, including a former treasurer and other senior members, were convicted on Thursday of offences including falsifying accounts, influence-peddling and tax crimes. They were sentenced to a combined 351 years behind bars.
In his ruling, the judge said there was evidence the party ran a slush fund for many years and that the credibility of Rajoy’s testimony denying it “should be questioned”.
“(His) testimony does not appear as plausible enough to refute the strong evidence showing the existence of a slush fund in the party,” the judge said.
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