Prosecutors had argued that Hoeness's voluntary disclosure - that he had failed to pay taxes - was incomplete and thus did not meet a vital requirement needed for amnesty under German tax laws designed to encourage tax evaders to come clean.
Hoeness has admitted he evaded 27.2 million euros (£22.7m) in taxes on income earned in secret Swiss bank accounts but the 62-year-old was hoping for leniency in one of the most closely watched tax evasion cases in German history.
"The voluntary disclosure is not valid with the documents that were presented alone," said the judge.
Hoeness, 62, bowed his head and stared at the floor when the verdict was delivered, his face turning red.
The case hinged on the question whether Hoeness, who as a player helped West Germany win the 1974 World Cup, fully cooperated with his voluntary disclosure. It shocked the nation and prompted thousands of tax dodgers to turn themselves in.
Hoeness's defence lawyers immediately announced they would appeal to the Federal Court of Justice.
"The high court will decide if his voluntary disclosure was valid, or partially valid or botched," said lawyer Hanns Feigen. "That's the interesting point. The key point is the way a taxpayer is being treated - as if he hadn't turned himself in."
The maximum sentence for tax evasion is 10 years and the prosecutors, citing Hoeness's cooperation, had sought a 5-1/2 year sentence.
Hoeness was first charged with evading 3.5 million euros in taxes. But when the trial began on Monday he stunned the court by admitting he had actually evaded five times that amount - or 18.5 million euros. That figure was raised further to 27.2 million euros on the second day of the trial based on testimony by a tax inspector. Hoeness's defence team acknowledged the higher figure.
Hoeness apologised to the court and pleaded for leniency.
"I deeply regret my wrongdoing," he said on Monday. "I'm doing everything I can to put this unhappy chapter behind me."
Tax evasion is a serious crime in Germany. Peter Graf, the late father of tennis champion Steffi Graf, was sentenced in 1997 to three years and nine months for evading 12.3m marks (6.3m euros). He was released after 25 months.
Hoeness, once one of Germany's most admired football administrators, voluntarily alerted tax authorities in January 2013 about his bank account and undeclared income. He said the Swiss account was a personal account created for financial market trades.
Some 55,000 tax evaders have turned themselves in over the last four years and paid a total of about 3.5bn euros in back taxes, according to the taxpayers association. The number of voluntary disclosures rose four-fold in 2013 from 2012.
Hoeness had been a friend of Chancellor Angela Merkel and a popular TV talk show guest. He spoke out for higher taxes and railed against tax evasion. His case has led to calls to change German laws that allow tax evaders to avoid prosecution if they turn themselves in before an investigation starts.
- Crime & Justice
- tax evaders
- voluntary disclosure