The former Chelsea striker was fined for tax evasion and sentenced to 6 months jail term, but he won’t serve the time.
Costa, 31, departed premier league side, Chelsea, to Atletico Madrid for a fee of €66 million euros in 2017.
The Atletico Madrid striker pleaded guilty to defrauding the state of more than €1m (£813,000) by not declaring payments of more than €5.15m (£4.19m) from his 2014 transfer.
Costa, have been fined €543,208 (£485,324) and was also sentenced to 6-month jail time.
But, the striker is set to escape jail time as the Spanish government permits sentences under 2 years on none violent crimes in a swap for a fine.
It is understood that Costa appeared in court on Thursday and agreed to pay the sum of €36,500 in exchange for the jail time in addition to the fine.
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“Diego Costa reached an agreement a few months ago with the prosecutor and has already paid the corresponding fine plus interest and the request for a prison sentence was withdrawn,” an Atletico spokesman told Reuters on Wednesday.