The striker moved to Anfield last summer on an initial free transfer.
The forward joined the club on a free transfer last summer, following the expiry of his contract at Turf Moor.
However, as he was a player under the age of 23, his former club were entitled to compensation given they had spent time and resources aiding his development.
The two sides failed to come to an agreement in negotiations, meaning that a tribunal was necessary to set the price of his transfer.
They have now agreed on an initial price of £6.5million, with the figure potentially rising to £8million based on his performances. They will also be due 20% of any future sale, reports the Telegraph.
The transfer fee sets a new record for one set by a tribunal, with fellow Reds striker Daniel Sturridge having set the record with his move from Manchester City to Chelsea.
The Blues initially paid £3.5million for his services, but that rose to £8.3million after City received extra for appearances for club and country as well as 15% of his £12million move to Anfield.