Hans Rathgeb, president of the Salzburg Provincial Court, approved the decision despite claims by Sanader's lawyer that the former prime minister would not receive a fair trial in Croatia.
Sanader said he would prefer to be tried in Austria, according to media reports.
Austria's High Provincial Court in Linz still has to issue an opinion before the extradition can take place. Until then, Sanader is to remain in custody in Salzburg.
Sanader has been in custody in Salzburg since 10 December (see 'Background'). The Croatian judiciary suspects him of abuse of office. He is charged with having siphoned some 80 million kuna (€10.8 million) from public companies and ministries via private company Fimi Media.
He is also charged with receiving kickbacks amounting to 3.5 million kuna (€474,500) for having approved a loan from Hypo bank to the Croatian government while he was deputy foreign minister.
Croatian anti-corruption agency USKOK is also investigating Sanader's role in illegal business deals concluded between state-owned power company HEP and Dioki, a company specialised in the production of petrochemicals and plastics.
Together with the owner of Dioki, Robert Jezic, Sanader is suspected of seeking unlawful gains of €10 million at the expense of state-run oil pipeline operator JANAF, according to reports in the Austrian media.
Austria also launched an separate investigation into Sanader's affairs on suspicion of money laundering.
Everyone in Croatia can expect to receive a fair trial, including former PM Ivo Sanader, Croatian President Ivo Josipovic said yesterday (9 May), commenting on the court's decision while on a visit to Italy.
"I am confident that everyone, including former Prime Minister Sanader, can have a fair trial in Croatia," Josipovic said, stressing that the trial take place under the scrutiny of not only the Croatian public but the global public as well.
