The Madrid city government said on Monday it would give Real Madrid a bill for €18.4 million ($20.6m) in illegal state aid after the European Commission ordered the club to repay the money.
The commission ruled that Real had been given an "unfair advantage" through tax breaks and land transfers.
"The city hall will establish the measures necessary to carry out the decision of the European Commission to recover the aid of €18.4m granted to Real Madrid," the local government said in a statement.
The EU's 31-page recommendation to the Spanish government encouraged the state to set a four-month payment schedule ordering Madrid to reimburse the city authority 18.4m plus interest.
The ruling said Real had benefited from a public subsidy in the form of cheap land by their Santiago Bernabeu stadium.
The club rejected it and blamed a Barcelona-based architectural firm for providing a misleading valuation to the authorities.
In 1998, the land was sold to the club for €488,000 before being sold back to the city council for €22.7m in 2011.
In her initial ruling, which was upheld, European Commissioner Margrethe Vestager wrote that the resale "gave Real Madrid an unjustified advantage over other clubs, which it now needs to pay back."
AS reported that the EU document also said: "The European Commission has determined that Spain gave illegal state tax credits to Real Madrid, thus violating Article 108, section 3 of the EU Treaty."
Last week, Real Madrid lost an appeal against the European Commission decision. They now plan to appeal at the European Court of Justice.
Barcelona, Athletic Bilbao and Osasuna, along with Real, were also ordered to pay back money over various instances of the state providing aid.
It was determined that Spain had created a tax shelter for the four clubs over the past 20 years and that they benefited unfairly by being classified as non-profit organisations, which pay a five percent lower tax rate on profit than limited liability companies.