The Croatian parliament has approved a law on adopting the euro from January 1, 2023.
The Lawmakers voted 117-13 in favour of replacing the kuna with the European single currency.
Under the legislation, prices in Croatia will be displayed in both currencies from September this year, and used in parallel throughout next year.
The government says the adoption of the euro should remove currency risk, reduce interest rates, improve the Croatian credit rating and pave the way for more investment.
A major challenge for Croatia, which joined the European Union in 2013; has been controlling inflation and budget spending, to meet the macroeconomic criteria for eurozone membership.
Croatia remains among the weaker economies of the EU; partly due to the enduring legacy of the war in the 1990s.
Croatia’s economy relies heavily on tourism revenue, drawing several million European and other global visitors each year.