The two clubs have agreed a fee of €15 million plus a further €5 million in add-ons, but several other terms still need to be settled before the transfer can be confirmed.
Bayern Munich sporting director Max Eberl addressed the situation on the sidelines of the club's German Super Cup win over Borussia Dortmund, indirectly confirming the state of talks to Bild.
"He has two days off and is visiting his family. That's naturally his home, and there's a club there that's interested in him. Let's see what happens in the coming days."
Palhinha, 31, joined Bayern from Fulham in 2024 for a substantial fee of €51 million, but never fully established himself in Munich and has struggled for regular playing time since.
A return to Portugal with Benfica would bring an end to what has widely been viewed as a mismatched spell at the Allianz Arena, with the Portugal international expected to slot back into regular football in his homeland once the remaining details are resolved.
Neither club has commented on what specifically remains outstanding, though such late-stage negotiations typically involve payment structure, bonus conditions or add-on clauses rather than the headline fee itself, suggesting the move remains on course to be completed before the transfer window closes.