Ancelotti was sacked by Napoli last week but a clause in his dismissal pay-out means that Everton would still have to pay compensation, according to the Daily Express.
The Serie A club included a similar clause when Chelsea wanted to appoint Maurizio Sarri in the summer of 2018.
Sarri had already been replaced by Ancelotti in Naples, but Chelsea still had to pay a fee in order to bring him to Stamford Bridge.
The London club eventually paid £4.5m as a compromise as they were already discussing a deal for Napoli midfielder Jorginho.
Tottenham have included a similar clause as part of their dismissal of Mauricio Pochettino, who will cost any Premier League club around £12m if they want to appoint him before the end of this season.
Napoli chairman Aurelio De Laurentiis is known for being a shrewd negotiator, so Everton and Ancelotti will have to do some serious talking in the next few days to get the deal over the line.
Ancelotti reportedly flew to London on Tuesday for face-to-face talks with Farhad Moshiri. Multiple reports claim that a deal has already been agreed in principle on a deal ranging from two-and-a-half to four-and-a-half years, with his backroom staff also lined up.
It has already been confirmed that Duncan Ferguson will continue as caretaker boss for Wednesday’s Carabao Cup quarter-final against Leicester, with any move for Ancelotti not expected to be confirmed until the end of the week.