Wolfsburg's director of sport Klaus Allofs says Manchester City have made an 'astonishing' salary offer to Kevin De Bruyne.
Sky Sports News HQ understands a general agreement is in place between both clubs for the 24-year-old, but negotiations over minor details have been described as 'protracted'.
Those talks continued in Monaco, where both clubs were represented in the draw for the Champions League group phase and Sky in Germany understand De Bruyne will undergo a medical at Manchester City this week, with Allofs seemingly resigned to losing the former Chelsea midfielder.
"He's had an astonishing, astonishing offer from City and we can't compete with that," he said. "We had to take it seriously and that is the way we react with our players and finally we decided to start negotiations with City.
If negotiations don't match our plans, then Kevin will still be our player for the coming season which I have to be honest would suit me.
"During the day we have gone on with negotiations and we've got closer to each other. But the deal is not already done. So hopefully we will find an end tonight or tomorrow morning.
"I would prefer to keep him, not to get the money. But the money now is really the issue because Kevin was qualified with Wolfsburg for the Champions League and he was a key player and took the next step.
"At Chelsea he was not that good and I know the story because I took him to Werder Bremen two years before and then to Wolfsburg. It will be very difficult - apart from Bayern Munich - to compete with the Premier League in the future.
"It is a big blow if he is leaving Wolfsburg but, you know, it's a difficult situation. Have a look at the statistics. Kevin did I don't know how many assists and he scored 10 goals so he was, he still is, a key player for Wolfsburg. It's really a situation that nobody was thinking about when he started with us."
It is understood a private jet has been on standby to transport De Bruyne from Germany to a medical in Manchester.
And Sky sources report that De Bruyne will not be selected by Wolfsburg for Friday night's Bundesliga match against Schalke.
Allofs added: "Of course it's stressful but it's a luxurious position for him to be in. He's going to go from a Champions League club to another Champions League club, that's a luxurious position to be in.
"He's done a lot of thinking but he's made this decision. To live with this uncertainty, as a professional footballer you'll just have to make it work."