The Portuguese wonderkid has been tipped to move to the Wanda Metropolitano as a replacement for Antoine Griezmann, who is widely expected to join Barcelona after declaring his desire to leave the club.
But after reports in Spain said the 19-year-old could be announced as an Atletico player imminently, his Portuguese club have reacted angrily.
“In view of the news published in these last hours, Benfica clarifies that it is false that any negotiation process is currently underway regarding a possible transfer of the player Joao Felix,” the statement read.
“The conditions for his negotiation are public and known, taking into account the termination clause defined in the amount of €120m.
“More serious, and that which deserves our most vehement repudiation and denial, is the fake news that refers to negotiations that involve commissions of 30 per cent and which, unfortunately, was echoed in Portugal by the newspaper A Bola, with intentions and goals that we do not understand.
“We repeat: this information is totally false, absurd and has clear intentions for the reputation and dignity of Benfica.”
Felix featured in the Uefa Nations League with the Selecao triumphing in the final against the Netherlands to add to their Euro 2016 title.
Felix broke out last season with a 20-goal campaign, also adding 11 assists.