According to Sky Sports, the Brazil international only signed a one-year contract when he joined the Gunners from Chelsea last summer for £8million.
The 33-year-old centre-back has not been offered an extension to continue at Emirates.
Luiz is now heading for the exit door, as Arsenal chiefs look to cut costs amid the coronavirus (COVID-19) pandemic and the likely lack of UEFA Champions League football next season.
Meanwhile, speaking on his future at Arsenal recently, Luiz admitted that he could return to his former club, Benfica to end his career at the Portuguese giant.
“I always said that I would like to end my career at Benfica,” Luiz told SporTV in Brazil.
“I love Benfica. My dream is to step on the pitch of Estadio da Luz in their colours.”