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The short answer
Interest from a Nigerian fixed deposit paid to you directly, with no Italian intermediary, is declared in your Italian return and generally taxed by a 26% substitute tax in quadro RM, section V, line RM12, on the gross amount before Nigerian withholding. You can opt for ordinary IRPEF instead, which is the only way to claim a credit for Nigerian tax withheld. The deposit itself is also reported in quadro RW.
Naira fixed deposits have paid high nominal rates in recent years, which tempts many Nigerians in Italy to keep savings at home. The interest is income, and Italy taxes residents on worldwide income. Receiving it in Nigeria, and never moving it to Italy, does not make it exempt.
How Italy classifies the interest
A commercialista specialising in international tax explains (2024, updated April 2026) that bank interest is "reddito di capitale" under article 44 TUIR, taxed when received and without deducting costs. Where a non-resident pays it and no Italian intermediary is involved, it is subject to a substitute tax at the same rate as the Italian withholding on that income: 26%. If an Italian bank or broker sits in the chain, it withholds the tax and you do not declare that income yourself.
Where it goes in the return
- Substitute tax route
- Quadro RM, section V, line RM12: column 1 the income code (the article cites code "G" for current-account interest; ask which code applies to a time deposit), column 2 the state code, column 3 the gross amount, column 4 the rate, column 5 the tax.
- IRPEF option
- Tick box 6 on RM12 and the amount flows to ordinary taxation; the source text is not fully consistent on the destination line, so let your adviser or software place it.
- Gross or net
- Gross of Nigerian withholding: the substitute tax base is the amount before Nigerian tax was taken.
What happens to the Nigerian tax withheld
Nigerian banks may deduct withholding tax on deposit interest; your statement or a withholding tax certificate should show it. In Italy:
- Under the 26% substitute tax, the art. 165 TUIR foreign tax credit is not available, so the Nigerian tax is a straight extra cost.
- Under the IRPEF option, the credit is available within its limits. Whether this saves money depends on your marginal IRPEF rate.
- There is no treaty route to reduce the Nigerian tax: the FIRS list of treaties in force shows the Italy treaty covers only air and shipping.
Worked example (illustrative figures only)
A ₦5,000,000 fixed deposit at an example 20% a year earns ₦1,000,000 over twelve months. Suppose the Nigerian bank withholds an example 10%, ₦100,000, and you receive ₦900,000. At an example rate of ₦1,700 to €1, the gross interest is €588.24. Italian substitute tax at 26% is €152.94. The ₦100,000 withheld in Nigeria, about €58.82, is not creditable under this route, so your total tax is about €211.76, or 36% of the gross interest. Real rates, withholding and exchange rates will differ; ask your adviser which exchange rate to use.
Mistakes we see often
- Declaring only what was moved to Italy. The tax follows the interest credited, wherever it stays.
- Using the net figure. The substitute tax base is gross; entering the amount after Nigerian withholding understates it.
- Forgetting rolled-over deposits. When a deposit rolls over with interest added, that interest has still been received; ask your adviser how to treat capitalised interest in the year it is credited.
- Ignoring the exchange rate. A large naira figure converted at the wrong rate can overstate or understate the euro amount by a wide margin.
- Skipping RW because no IVAFE is due. Reporting and paying are separate duties; a small balance can mean no IVAFE but still a line in RW.
If you discover you have missed earlier years, correcting voluntarily usually costs far less than waiting to be contacted. The reduced penalties under ravvedimento operoso are set out in our RW penalties guide linked below.
The deposit itself: RW and IVAFE
A deposit held in Nigeria is a foreign financial asset. Money.it's 2026 guide explains that quadro RW must be filled in whenever foreign assets are held, even if no tax is due, and that IVAFE applies at 0.2% of value, with a fixed €34.20 for current accounts and nothing due where the average balance with one intermediary is €5,000 or less. Whether a naira time deposit is treated like a current account or as another financial product is a point to confirm with your adviser. Our explainer on how IVAFE is calculated works through the numbers, and RW penalties covers what happens if you missed it.
What to keep each year
- The deposit certificate or contract showing amount, rate and dates.
- Statements showing interest credited and any tax withheld.
- The withholding tax certificate, if the bank issues one.
- Your record of the exchange rates used for each amount.
This is information, not tax advice. For T-bills, which work differently, see Nigerian T-bill interest in Italy; for the Nigerian-side product itself, see fixed deposit vs savings account.
Where Pryme fits
Pryme's Fixed Savings Box is a naira product for money held in Nigeria, with the rate shown in the app before you commit (Savings Boxes). The same Italian rules apply to its interest as to any Nigerian deposit, so keep the app statements for your commercialista.
Questions people ask
Do I pay Italian tax on interest from my Nigerian bank?
Yes, if you are Italian tax resident. Interest received directly from abroad is generally subject to 26% substitute tax in quadro RM, with an option for ordinary IRPEF.
Can I offset Nigerian withholding tax in Italy?
Only if you opt for ordinary IRPEF; under the 26% substitute tax, the foreign tax credit is not available.
Do I declare interest that I left in Nigeria?
Yes. Income received abroad is not exempt just because it stays there.
Does my Nigerian fixed deposit go in quadro RW?
Foreign financial assets go in quadro RW even when no IVAFE is due, according to Money.it's 2026 guide.
Sources
- Fiscomania: interessi attivi di fonte estera (updated 29 Apr 2026) · accessed Oct 2026
- Money.it: IVAFE 2026, imposta sulle attività finanziarie estere (1 Apr 2026) · accessed Oct 2026
- FIRS Information Circular 2022/15 on claiming tax treaty benefits (11 May 2022, via KPMG) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.