The German government said it would inform the European Commission of its decision.
Its statement noted that a transitional period of restricted access to the German labour market for Croatian nationals would expire on June 30. The German government will not use the possibility to extend that period (3+2 years), the statement added.
The initial phase of restricted access to the German labour market has included many exceptions for Croatian workers and Croatians with university degrees who have found employment in Germany in line with their qualifications have been able to work there. The German market has also been open to Croatian researchers and seasonal workers since Croatia's accession to the EU on July 1, 2013.
Earlier this year the restrictions were additionally eased, making it possible also for workers with qualifications requiring at least three years of education to seek employment in Germany.
Restrictions existed only for Croatian construction companies and companies specialising in cleaning services wishing to hire Croatian workers in Germany.
The cancellation of restrictions on July 1 will make the German market open also to the last category of workers, those without qualifications.
As of that date, Croatian companies in Germany will be able to hire Croatian nationals without any restrictions. When hiring workers, those companies will have to abide by German laws, the government noted.
The legally defined minimum hourly wage that has been in force in Germany since the beginning of this year also applies to companies from Croatia, the government said.
It also noted that the situation in the German economy and on the labour market was stable and that new workers from Croatia could be accepted.
In 2014, 93,000 Croatian nationals had jobs in Germany with full-scale social contributions.
The German government expects 10,000 Croatian nationals to seek employment in Germany annually but notes that the number could vary depending on the situation in Croatia.
The cancellation of said restrictions for Croatian nationals after only two years sets a precedent because this is the first time after an EU enlargement round that Germany has not used its right to impose labour restrictions for a full period of seven years.
Germany was one of the 13 EU countries that introduced restrictions for access to its labour market by Croatian nationals after Croatia joined the EU on 1 July 2013.
The other countries to have done so were Greece, France, the Netherlands, Cyprus, Austria, Great Britain, Slovenia, Belgium, Spain, Luxembourg, Italy and Malta.
Croatia's accession treaty envisaged the possibility of a transitional period during which EU member countries could introduce employment restrictions for Croatians according to the model "2+3+2", meaning that the initial two-year period of restricted access to the labour market could be extended by three more years, and by an additional two years if there was a justified reason for it.
The same rules applied to all new members that joined the EU in 2004 and 2007.
Of the other 12 countries, Slovenia has already announced that it will prolong the period of restricted access to its labour market for Croatians, while Belgium has said that it will not do it.
Since Croatia's accession to the EU, its citizens have had unrestricted access to the labour markets of Portugal, Poland, Sweden, Romania, Bulgaria, Hungary, Ireland, Slovakia, the Czech Republic, Denmark, Finland, Estonia, Lithuania and Latvia.