A German court has removed a hurdle for legally allowing the extradition of a prominent Catalan politician to Spain on charges of embezzlement, although no such extradition request has been approved by prosecutors.

In its decision in the case of Carles Puigdemont, the Schleswig-Holstein state court said the former Catalan leader could not, however, be extradited on charges of rebellion, which is not recognised in Germany.

That would mean if he is extradited he can only stand trial in Spain on embezzlement charges over allegations he misused public funds, court spokeswoman Christine von Milczewski said, adding that the decision can be challenged.

Rebellion carries a maximum sentence of 30 years in prison, while misuse of public funds carries up to 12 years.

Mr Puigdemont fled Spain to avoid jail and has been living in Hamburg as he fights extradition.

The court said in its ruling that he may remain free.

Mr Puigdemont's press spokeswoman Joan Maria Pique issued a short statement, saying that without the rebellion charge the "main Spanish accusation falls".

"Catalan political prisoners should be freed NOW," he said. "He remains free. And there are options to rebut the embezzlement."

The court said the state's prosecutors will have to decide on whether to approve Spain's extradition request.

It was not clear when that decision would be made.

The charges are in connection with the Catalan regional government's unauthorised referendum last year on independence from Spain and a subsequent unilateral declaration of independence by the separatist-controlled regional parliament.

The Spanish government rejects Catalan independence.

Quim Torra, the Catalan region's current president and a fervent separatist, said the dropping of rebellion charges was "wonderful news".

"This demonstrates once again the mistakes and lies behind a legal case which should never have been opened. We will win in Europe," Mr Torra tweeted.