AC Milan CEO Adriano Galliani has announced that the club have broken off negotiations with Real Madrid over a move for Kaka.
The Brazilian confirmed last week that he would be willing to take a pay cut to move back to San Siro, having left the Rossoneri for the Spanish capital in 2009.
Galliani soon confirmed that the club had entered talks with the Spanish champions over a move for the player, but has now said that financial problems have put paid to the deal.
The negotiations for Kaka have broken down, he told reporters.
It s not possible to complete the deal for fiscal reasons.
We had agreed on everything else, but the deal broke down about an hour ago.
Milan also made a move to re-sign the Brazilian during the summer transfer window, but were unable to seal the deal back then too.
The 30-year-old has found form and first-team opportunities hard to come by at the Santiago Bernabeu, and has only made seven Liga appearances this season, scoring in none of them.
Kaka s first spell at San Siro was between 2003 and 2009. During his time there, he won one Scudetto and one Champions League title.