The 31-year-old Portuguese has continued to train professionally throughout the saga, according to club officials in Munich, even as interested parties including Aston Villa and Newcastle United hesitated over making concrete offers.
According to A Bola, Benfica have verbally agreed a four-year contract with Palhinha worth around €6 million gross per year. In parallel, the Portuguese club are understood to have submitted an offer to Bayern of €15 million as a guaranteed fee plus a further €5 million in possible bonuses.
Sources at the Lisbon club are said to be confident of completing the transfer in the near future. In England, it had recently been reported that Aston Villa also remained interested in the defensive midfielder, with both Villa and Benfica having previously attempted to structure the deal as a loan.
Both approaches were turned down by Bayern, who are now pushing for a permanent sale.
Palhinha's future has been the subject of prolonged speculation throughout the summer, with Bayern Munich keen to move him on after he fell out of the club's plans. His arrival at Benfica would add further Premier League and Bundesliga pedigree to a Lisbon midfield already being reshaped this summer, giving the Portuguese international a route back to regular football closer to home after a difficult period in Bavaria.
Palhinha joined Bayern from Fulham in 2024 for a fee in the region of €51 million, a club-record sale for the west London side at the time, but has struggled to establish himself as a regular starter in Munich since making the move.
Newcastle had also been credited with interest in the midfielder earlier in the window, reportedly offering him a three-year contract as they searched for a successor to Bruno Guimarães following his departure to Arsenal, though Benfica's advanced position now appears to have moved the Magpies down the list of contenders for his signature.
At Benfica, Palhinha will be reunited with his former Fulham manager, Marco Silva.