Old Trafford chiefs have earmarked a summer swoop for Kroos, 27, as Jose Mourinho continues to reshape his squad.
But their Bernabeu counterparts are unwilling to sell, according to the Independent
Kroos could replace Michael Carrick who is out of contract at the end of the season.
World Cup winner Kroos is under contract until 2022 after signing a new contract last October.
United legend Paul Scholes believes the 27-year-old is the perfect midfield partner for Paul Pogba.
"I really like Toni Kroos," Scholes said.
"I was a rather forward-looking midfielder, but Toni is the best in the world, and Kroos would be perfect next to Pogba and Ander Herrera at United."
United are ready to back Mourinho in the transfer market with a kitty worth £1bn over five years
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