Palhinha, 30, became a fan favourite at Tottenham, scoring the goal that kept them in the Premier League in their 1-0 win over Everton on the final day.
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Tottenham are understood to have a €30million option to buy included in the loan deal from German giants Bayern Munich.
According to Portuguese outlet A Bola, Palhinha’s former club Sporting have stolen a march on Spurs and are close to agreeing personal terms.
There is one final obstacle, however, as Sporting are yet to agree a deal with Bayern, who are looking to sell Palhinha.
Bayern want an outright sale, but Sporting are pushing for a loan-to-buy deal.