The Spanish outfit is one of nine clubs to have had sanctions levied against them following a meeting of UEFA's Club Financial Control Body.
Manuel Pellegrini's side will be prevented from entering the next European competition they qualify for and could face a further season's absence unless the club settles its debts.
Malaga, who are due to face Porto in the last 16 of this season's Champions League, have also been fined £244,000
A statement on the UEFA website read: "Malaga is excluded from participating in the next UEFA club competition for which it would otherwise qualify in the next four seasons (i.e. 2013/14, 2014/15, 2015/16, 2016/17).
"In addition, Malaga will be excluded from a subsequent UEFA competition for which it would otherwise qualify (in the next four seasons) if it does not prove, by 31 March 2013, that it has no overdue payables towards football clubs or towards employees and/or social/tax authorities."