The Daily Mail says the midfielder has had seven meetings with the Barca powerbrokers about a new deal but no offer has yet been made.
Xavi, 28, is paid less than Lionel Messi, Thierry Henry and Carles Puyol.
He is looking for a significant improvement with any new contract and source close to Xavi said: "Barcelona seem to think that because he is Catalan he would never leave the club.
"This is a dangerous and arrogant attitude. He is one of the best midfielders in the world but Barcelona do not seem to realise his value."