Bild says Schalke chief Andreas Muller has threatened to rip up Rafinha's contract, but he scoffed: "If they take it away, I'll just regroup. Big clubs have shown interest in me and Schalke did not want to sell, like to Liverpool.
"I would be sad to leave, but I would be free."
Rafinha has also been linked with Manchester United this year.
Meanwhile, earlier today Muller attempted to take the sting out of the controversy.
He said: "We have not threatened. And there was never any sales talk. "