The Welsh winger, who was nominated for the Ballon d’Or, joined Madrid in a world-record move from Tottenham Hotspur in 2013.
He has gone on to score 62 goals in 130 appearances for Los Blancos, winning two Champions League crowns and the 2013/14 Copa del Rey.
According to Guardian, Bale will be earning £350,000 per week after tax – with a buyout clause set at €1 billion (£900m) – making him the best-paid player at the Santiago Bernabeu.
Cristiano Ronaldo, who reportedly earns £288,000 per week, is said to be negotiating new contract terms himself, however, and is expected to be the club’s top earner again before the end of 2016.
“Real Madrid CF and Gareth Bale have agreed to the extension of the player’s contract, which is linked to the club until 30 June 2022,” a short statement released on Real’s official website read.