The topic of this master's thesis is the business conditions of companies in Croatia with the purpose of providing an overview of significant information and useful guidelines to companies for achieving financial stability and success. This thesis provides a detailed analysis of factors shaping the external business environment. By examining the trends of selected macroeconomic factors, the consequences of adopting the euro, and conducting a PESTLE analysis, a comprehensive view of economic trends is presented. The paper analyzes the Croatian tax system to familiarize readers with tax categories and the efficiency of different types of taxes. The thesis explores the impact of tax incentives and exemptions on business and employment in Croatia with the aim of assessing their effectiveness. Additionally, it provides an overview of international double taxation treaties and legislative treatment of domestic and foreign investors in Croatia. The selected methodology is the analysis of existing literature, including scientific articles, expert books in the field of economics, official publications of state bodies, as well as current Croatian laws. Croatia is a relatively young country classified as a small open economy, making it highly dependent on the economic cycles in the European Union and the world. Therefore, it is crucial to have an efficient tax system, but the current system is rated as complex and does not provide sufficient educational content for either officials or citizens, which further complicates the adjustment to economic changes. Nevertheless, businesses in Croatia can take advantage of numerous tax incentives and reliefs, legally reducing their tax burden. However, employer costs are numerous, and the system is difficult to understand without knowledge of the language and direct assistance, which is why Croatia struggles with the issue of tax evasion. Thanks to a large number of international agreements on avoiding double taxation and the predominantly equal treatment of domestic and foreign investors, Croatia is fertile ground for further investments, but mandatory changes in bureaucracy are needed.