Darren Grimes had been fined the maximum £20,000 possible under Electoral Commission rules
Mr Grimes was hit with the five-figure fine in 2018 after the elections watchdog said it had found 'significant evidence' that the official Vote Leave Brexit campaign had failed to properly declare its links with his youth-focused BeLeave group.
But Mr Grimes appealed against the fine at the Mayor's and City of London Court, accusing the watchdog of 'errors of fact, the law and unreasonableness'.
In a statement, Mr Grimes said he was 'delighted and relieved that the Court has found me innocent'.
He added: 'This case has taken a huge toll on myself and my family, and I'm thankful it's now over. I will be eternally grateful to all those people who have supported me - your generosity and kind words of encouragement have kept me going.'
'The Electoral Commission's case was based on an incorrectly ticked box on an application form - something that it had been aware of for over two years and had not been raised in two previous investigations.'
'Yet the Commission still saw fit to issue an excessive fine and to spend almost half a million pounds in taxpayer cash pursuing me through the courts. This raises serious questions about its conduct both during and after the referendum.'
The case against Mr Grimes had focused on a £680,000 donation from Vote Leave to BeLeave in the final weeks of the EU referendum.
The Commission found that this had been used under a 'common plan' between the two groups to spend money on digital ads from Canadian firm Aggregate IQ - a move that meant Vote Leave broke the £7 million legal spending cap imposed on campaigns.
Under electoral law, groups are allowed to transfer money but cannot direct each other on how to spend it.
In statement following the verdict, the watchdog said: 'We are disappointed that the court has upheld Mr Grimes’ appeal.'
'We will now review the full detail of the judgement before deciding on next steps, including any appeal.'
Author's comment: This is a welcome judgment as the Electoral Commission wields far too much power, especially when it comes to its treatment of the smaller political parties, including Britain First, which was recently slapped with a five-figure fine for what the Electoral Commission said were multiple breaches of electoral law.