Reports in Spain suggest Xavi will earn over £7million a year and have the option of a fourth year with the club.
The 35-year-old, whose contract at Barcelona runs out in the summer, has been at the club for his entire career, going back 24 years, and has been linked with moves to the Middle East and United States.
Since making his debut for the Catalan giants in 1998, he has won seven La Liga, three Champions League and two Copa del Rey titles.
Xavi retired from international football after last summer’s World Cup in Brazil, picking up 133 caps and scoring 11 times for Spain, he was a key part of Spain’s European Championship wins in 2008 and 2012 and their first ever World Cup win in 2010
Barcelona are yet to comment on the reports.