The 32-year-old had a good outing at the 2018 FIFA World Cup, leading his nation, Croatia to the competition final where they were defeated by France 4-2.
The 32-year-old midfield maestro Luka Modric is now set to stay at Real Madrid after being linked with Inter.
The World Cup best player award (Golden Ball)reiterated his desire to join the Nerazzurri again on Friday but Real Madrid president Florentino Perez remains determined to keep him.
The new deal has been lined up for Modric, who has been in Madrid for six years since joining from Tottenham, to see him paid on level terms with Real Madrid captain, Sergio Ramos.
Modric has made 257 appearances, scoring 13 goals since joining Madrid in the summer of 2012.
He won 14 trophies since then including the last three consecutive Champions League titles