Oslo prosecutors slapped the fine on the Diocese of Oslo, responsible for keeping national records of Catholics living in the Scandinavian country, according to the ruling seen by AFP.
The diocese is accused of having gone through telephone directories looking for immigrants with names suggesting that they were from Catholic countries and adding them to the list of members of the church between 2011 and 2014, sometimes without their knowledge.
In Norway, a predominantly Protestant country, the state finances the various religious minorities in proportion to the number of church members.
By exaggerating the list of its members, the diocese was able to obtain undue government subsidies. Its chief administrative officer, Thuan cong Pham, has been charged with aggravated fraud, the prosecution said.
If the diocese refuses to pay the fine it will have to face trial.
"We've never done anything illegal or received too much money," the Catholic Church said in a statement. "We have always recognised that we have made mistakes and had an unfortunate practise in parts of our registration. This was cleaned up a long (time) ago."
In its defence, the church argued that from 2004, Norway experienced a large wave of immigration from Catholic countries, especially Poland.
These members were not registered, leading to an increase in spending without corresponding public support.
Independently of the fine, the Norwegian state is seeking a reimbursement of 40.6 million kroner from the Catholic Church in what it declares was overpaid.
The Norwegian Catholic Church had about 145,000 members at the beginning of the year, according to the national statistical institute SSB.