The limit has been accepted by the club as part of wide-reaching sanctions for breaching UEFA's financial fair play rules (FFP).
The Premier League champions have agreed a settlement offer with UEFA which confirms a number of other sanctions including a 60million euro fine (£49million) - though 40million euros of that will not be imposed if the club meets new break-even limits - and City being handed a reduction in their Champions League squad for next season from 25 to 21 players.
The sanctions also includes a salary freeze on their Champions League squad for the next two seasons.
City said in a statement they had agreed to limit their net spending on new players to 60million euro (£49million).
The statement said: "The club's expenditure on new players for the upcoming summer transfer window, on top of income from players it might sell, will be limited to 60m euros. This will have no material impact on the club's planned transfer activity."
City said there had been "a fundamental disagreement" over the interpretation of the FFP regulations on players purchased before 2010 but that it had "decided to enter into a compromise agreement with UEFA".
French club Paris St Germain were handed virtually identical sanctions as City, while the other clubs to have failed FFP were revealed as Galatasaray, Trabzonspor and Bursaspor from Turkey, Russian sides Zenit St Petersburg, Anzhi Makhachkala and Rubin Kazan, plus Levski Sofia from Bulgaria.
City's statement added: "The MCFC Champions League squad for the 2014-15 competition will be limited to 21 players. In 2013-14 the club registered 23 players for the competition and used 21.
"The wage bill of the whole club (playing and non-playing staff) for 2014-15 will need to remain at the same level as that of 2013-14 season.
"The nature of conditions that will result in the lifting of sanctions means that the club expects to be operating without sanction or restriction at the commencement of the 2015-16 season."
City have agreed to cut losses to a maximum of 20m euros (£16.3m) for the 2013-14 financial year and a 10m euros (£8.2m) deficit for the 2014-15 season.
City's £400million, 10-year Etihad sponsorship deal was passed by UEFA but the club have agreed not to increase the value of two "second-tier commercial partnerships" with other parties related to their Abu Dhabi-based owners.
The club has also agreed that revenues from the sale of image rights to related parties will not be included in future break-even calculations.
However, UEFA has downgraded the value of PSG's 200million euro annual deal with the Qatar Tourism Authority and "a fair value, significantly below that submitted by the club, has been assigned", said the European body.
- Sports & Recreation
- Champions League