The contract includes an option to extend his stay at the Nou Camp for a further 12 months.
Spanish sensation expected to make a decision on his future in the coming days.
Los Colchoneros will expose a loophole to secure the Spanish winger - before signing him in January.
Real Madrid were thought to be favourites to sign the 18-year-old this summer.
The Catalans have also completed the transfer of Cristian Tello to the Andalucian side.
Sandro recently returned from the Under-21 European Championship with Spain.
Premier League giants have made significant progress on the transfer over the weekend.
Muriel is also a target for La Liga outfit Sevilla.
The former Barcelona hero believes that his compatriot is ready to play at the Nou Camp.
Spaniard moved to Goodison Park in the summer of 2015 having previously been on loan with the Toffees.
23-year-old is expected to serve as the third choice goalkeeper for Ernesto Valverde.
20-year-old midfielder expected to complete move to Bernabeu after Under 21 European Championship.
Several reports claim that the Real Betis star will complete his move to Real Madrid after the tournament.
Liverpool and Juventus have also been linked with his services in recent times.
Los Colchoneros president says talks may happen in January, but doubts anything will happen.
Both midfielder and club president Enrique Cerezo have reiterated that Spanish Under-21 star will stay put.
Midfielder's agent has confirmed La Liga side are interested in his client.
Belgium international has been on-and-off again linked with Los Blancos.
France starlet says that playing for Real Madrid is a childhood dream.
Josep Maria Bartomeu says the La Liga giants are working hard to strengthen the squad.
United are also pushing for a deal in signing Rodriguez's Real teammate Alvaro Morata.
Thomas Christiansen's side have launched £3.1m offer to complete his signing from Huesca.