Training compensation is one from compensation the FIFA rules allow. This payment may be required at two different times of a player’s professional football career:

1. the player’s first time registering as a professional player for the first time in another country other than the on where he was trained; and
2. player’s subsequent international transfer.

In the first situation, the club where the player registers must pay training compensation to every club that contributed to the player’s training starting for the season of the athlete’s 12^th birthday through the season of his 21^st birthday.

In the second situation, when a player is subsequently transferred internationally,  the new club must pay the immediately prior professional club training compensation.

Training compensation is due within a month of the player signing a professional contract. The compensation amount is calculated according to a specific equation: the value attributed to the level of training (determined by the country and the caliber of the club) multiplied by the number of years spent training (between the ages of 12 and 21).

Different clubs have different financial values according to the confederation to which it belongs and the caliber of the training – the latter of which is indicated by the category attributed to the club. There are six confederations under four categories of clubs. These categories are based on the financial investment the clubs spend on their players. Category I is reserved for the highest caliber while Category IV is the least.

FIFA provides this chart to indicate what compensation may involve according to the respective confederation and the respective category. This chart was updated in 2020.

For example, Fred is an American soccer player who trained at two different American academies before he was transferred to a UEFA club in Germany. Fred was trained from the age of 13 to 21 at one American academy for two years and the other academy for six years, the new UEFA club must pay these two academies compensation. Germany has clubs listed under all for categories within the UEFA confederation, and if the club to which the American player transfer is a category II club, then the club will owe the first academy EUR120,000 (EUR 60,000 for two years) and the second academy EUR 360,000 (EUR 60,000 for six years).

Source:

https://www.parsalaw.com/fifa-player-transfers