The English top division declared on Friday that Everton had lost 10 points as a result of their violation of Premier League financial regulations.
Everton was referred by the league to an independent commission in March due to a purported violation of its sustainability and profitability regulations (PSRs).
Clubs risk sanctions if they lose more than £105 million ($130 million) in three years.
Everton drops to 19th place in the standings as a result of the most significant sporting penalty in the competition's history.
Did you read this?
"The club acknowledged it was in breach of the PSRs for the period ending season 2021/22, but the extent of the breach remained in dispute," the Premier League said in a statement.
"Following a five-day hearing last month, the commission determined that Everton FC's PSR calculation for the relevant period resulted in a loss of £124.5 million, as contended by the Premier League, which exceeded the threshold of £105 million permitted under the PSRs.
"The commission concluded that a sporting sanction in the form of a 10-point deduction should be imposed. That sanction has immediate effect."
Everton declared they would be filing an appeal in a statement stating they were "shocked and disappointed by the ruling".
