City said they are "disappointed but not surprised" by UEFA's announcement and will appeal against the punishment to CAS.
"With this prejudicial process now over, the Club will pursue an impartial judgement as quickly as possible and will therefore, in the first instance, commence proceedings with the Court of Arbitration for Sport at the earliest opportunity."
Uefa launched an investigation after German newspaper Der Spiegel published leaked documents in November 2018 alleging City had inflated the value of a sponsorship deal, misleading European football's governing body.
Reports alleged the club - who have always denied wrongdoing - deliberately misled Uefa so they could meet FFP rules requiring clubs to break even.
City have been drawn to face Real Madrid in the last-16 of this season's Champions League, with the first leg of that tie set to be played on February 26 at the Bernabeu.
The ban comes into force next season and doesn't affect this year's European competitions.
In the appeal is unsuccessful, it raises serious questions about Pep Guardiola's future at the Etihad, without Champions League football.