The bid is less than City's £24m valuation, although ity will note that Milan's intent to sign him is now serious.
And the price is the same amount Balotelli cost them when they signed him from Internazionale in the summer of 2010.
A potential stumbling block is that Milan wish to pay any fee in six instalments.
City want a lump sum that can be reinvested swiftly.
Milan have already made one attempt to take Balotelli on loan rejected when Mino Raiola, the player's agent, met City's chief executive Ferran Soriano in Manchester earlier this month to suggest a temporary deal until the end of the season.