News weekly Der Spiegel wrote in its upcoming issue that VW, which owns 49.9 percent of Porsche, could buy the 50.1 percent stake in the manufacturer of the iconic 911 car for €3.9 billion ($5.0 billion) in 2012.
The report cited unnamed VW executives.
Porsche has built up massive debts as it looked to seal a tie-up with VW and Der Spiegel said two previous obstacles now look surmountable.
Volkswagen will avoid having to pay more than €1 billion in taxes for completing the deal before 2014 by creating a holding company to buy and maintain the stake in Porsche, according to the report.
VW would also fulfill Porsche's demands for independence by signing a contract giving the sports car maker control over its investments and models, Der Spiegel said.
Porsche spectacularly failed in an attempt to take over VW in 2008 which resulted in the luxury carmaker having to be saved by Volkswagen.
A VW spokesman could not immediately be reached for comment.