Watches each worth more than £16,000 were handed out to a representative from all 32 countries at the World Cup - including England, according to FIFA's ethics investigators.
A Parmigiani watch was also distributed in a gift bag from the Brazilian federation (CBF) in June to the 28 FIFA executive committee members. It is unknown what happened to the gift bag for the English FA.
FIFA's ethics committee said accepting such valuable gifts contravenes its rules and has demanded that all the watches be returned by October 24 otherwise it will launch disciplinary proceedings.
However, Jérôme Valcke, Secretary General of Fifa, took the organisation way beyond parody when he asked the ethics committee if each ExCo member could receive two Hublot watches. He was informed it would be a breach.
A statement from the ethics committee said: "The CBF should not have offered the watches, and those who received gift bags should have promptly checked whether the items inside were appropriate and, upon discovering the watch, either returned it or... reported the matter to the investigatory chamber.
"The FIFA code of ethics plainly prohibits such gifts. Football officials may not offer or accept gifts that have more than 'symbolic or trivial value'.
"If in doubt, gifts shall not be offered or accepted. Football officials are expected to be aware of the importance of their duties and concomitant obligations and responsibilities.
"In an effort to resolve this matter expeditiously, the investigatory chamber will not pursue further formal ethics proceedings in this matter against officials who submit the Parmigiani watch they received from CBF to the secretariat of the investigatory chamber by no later than October 24, 2014."
The watches will then be donated to an independent non-profit organisation "committed to corporate social responsibility projects in Brazil", said the statement.
Several officials did report the watches to the ethics committee and the CBF confirmed it had distributed 65 gift bags, each containing a Parmigiani watch.
The recipients comprised "the 28 officials on the FIFA executive committee, a representative from each of the 32 member associations competing in the 2014 FIFA World Cup Brazil, and a representative from each of the 10 member associations in CONMEBOL (the South American confederation)", said the statement.
The CBF said they had paid 8,750 US dollars for each watch but that the ethics committee had obtained an independent valuation of 25,000 Swiss francs (£16,400).