Former Yugoslav spy chief Zdravko Mustac, 74, and ex-agent Josip Perkovic, 71, were found guilty of complicity in the murder of Stjepan Djurekovic, who was opposed to Yugoslavia's communist regime, a Munich court ruled.
Perkovic also headed Croatia's military intelligence services after the country proclaimed independence from ex-Yugoslavia in 1991.
Both men were extradited from Croatia in 2014 in a case that had sparked a row between the European Union and its newest member.
"The court finds that the accused Zdravko M. Had asked the accused Josip P. To plan and prepare for the murder of Stjepan Djurekovic," the court said in a statement.
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He was shot multiple times and hit with a cleaver by three still unidentified people.
Prosecutors say the motive was to silence Djurekovic, who had information about alleged illegal business dealings by the son of a leading Yugoslav politician.
A Croatian man had already been sentenced to life imprisonment in the case in 2008.
The extradition process of the two accused had strained ties between the EU and Zagreb.
Three days before joining the EU on July 1, 2013, Croatia changed a key law, making it impossible to extradite persons wanted for crimes committed before August 2002.
But the government denied the claims, saying its aim was to protect veterans of the 1990s independence war from being investigated by the EU.
Under pressure from the EU, Zagreb finally amended the law, paving the way for the men's extradition.