The court said that because Puigdemont can't extradited for rebellion means he posed less of a flight risk and could be released on bail.
Puigdemont was convicted in multiple cases of corruption, conducting an unsanctioned independence referendum and to rebel against the rebellious against the ruling government.
The former Catalan leader was arrested as he entered Germany last month on a Spanish-issued arrest warrant.
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According to a statement issued by the Court today, "for legal reasons" extradition for rebellion cannot be accepted as it is established by the Spanish Penal Code, because the charges against him would not be punishable in Germany according to the current laws here.
He had been living there after being charged by Spanish authorities with rebellion and misuse of public funds in last year's Catalan independence referendum, which the Spanish central government deems to have been illegal.
The court, in Berlin, said the rebellion charge Puigdemont faced in Spain was not a criminal offence in Germany, while the violence component that would justify a high treason charge was also missing.
Spain has accused the Catalan separatist of rebellion and corruption after he organised an unsanctioned independence referendum.
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Spain's Constitutional Court established past year that Catalonia's referendum and subsequent declaration of independence were unconstitutional.
However, the court disagreed Thursday, saying Puigdemont can't be extradited for rebellion.
The Spanish government's quelling of the October 1 independence referendum drew global condemnation and outrage, with footage of national police officers and members of the Civil Guardia seizing ballot boxes and violently dispersing voters going viral on social media.
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