Real Madrid's James Rodriguez celebrates scoring their second goal during the march against FC Barcelona, at Santiago Bernabeu, in Madrid, Spain, April 23, 2017. [Photo/Agencies]

The loan will cost Bayern Munich five million euros per season, after which they have an option to make the move permanent for a further 35 million euros.

If that happens, the total cost of the deal will be 45 million euros, well below the 80 million Real Madrid paid to buy James from Monaco in the summer of 2014.

James joined Madrid after finishing as top scorer in the 2014 World Cup, but has been a slight disappointment in Spain; despite scoring 13 league goals in the 2014-15 season, the two subsequent campaigns saw him enjoy less and less protagonism and he was not even on the bench for the 2017 Champions League final against Juventus.

With the 2018 World Cup around the corner, James will once again work with Carlo Ancelotti, the man who was in charge at Madrid for his best season at the club.

"Rodriguez was the big request of Carlo Ancelotti after they worked successfully in Madrid," said Bayern's General Director, Karl Heinz Rummenigge on the Bayern website.

James' departure now opens the door for Real Madrid to confirm the signing of Dani Ceballos from Betis.