In January, Los Blancos, alongside city rivals Atletico, were suspended from making transfers for two consecutive windows, as they were charged with breaching FIFA regulations relating to the protection and transfer of minors.
The bans were delayed as they both appealed to the governing body, but FIFA confirmed on Thursday that the decision is to be upheld, meaning they will not be able to sign any players until 2018.
And Real have confirmed they will take the case higher and look to CAS to have the ruling nullified.
"In light of today's decision by the FIFA Appeal Committee," a statment read. "Real Madrid C. F. wishes to communicate the following:
"1. The club regrets said decision, understanding it to be deeply unjust and contrary to the fundamental principles of disciplinary law.
"2. The club will begin the appropriate appeals procedure before the Court of Arbitration for Sport (CAS), requesting that the decision be completely overturned, with absolute confidence that said organisation will come to an entirely favourable decision.
"3. Real Madrid C. F. will request that the procedure be undertaken in an urgent manner in order to obtain a decision from the CAS as quickly as possible."
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