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The short answer
If you live in the UK, the US or Canada, coupons from Nigeria's Eurobonds are foreign interest and are taxed in your country of residence in the year you receive them, converted into your home currency. A credit is available only for any Nigerian tax actually withheld, and whether Nigeria withholds on Eurobond coupons is something to confirm in the bond's offering circular. US and Canadian residents may also have to report the bond itself on foreign asset forms.
What you are holding
Nigerian Eurobonds are US-dollar bonds issued by the Federal Government on international markets. The most recent sale, announced by the Debt Management Office on 5 November 2025, raised US$2.35 billion in a 2036 bond priced at 8.6308% and a 2046 bond at 9.1297%, listed in London and on FMDQ and NGX. The DMO notice says the target market was eligible counterparties and professional clients, which is why retail access usually runs through a broker or a fund; see buying a Eurobond from abroad.
Coupons are paid in dollars, usually twice a year. For tax, what matters is where you are resident when each coupon is paid.
The Nigerian side
We could not confirm from an official source whether Nigeria deducts withholding tax on coupons paid to foreign holders of its Eurobonds. Eurobonds are issued under their own offering circular, which sets out the tax position for holders, and naira-bond rules cannot simply be assumed to carry over. Read its "Taxation" section, and check your broker statements: if no tax is shown as withheld, there is nothing to credit abroad.
If any Nigerian tax is withheld and you live in the UK, Article 11 of the UK–Nigeria agreement caps source-country tax on interest at 12.5% of the gross amount.
United Kingdom
- UK residents normally pay tax on foreign interest, reported through Self Assessment (GOV.UK, Tax on foreign income).
- Convert each coupon into pounds. HMRC publishes monthly exchange rates and average rates for the years to 31 March and 31 December; whichever you choose, use it consistently.
- If Nigerian tax was withheld, Foreign Tax Credit Relief is the lower of the foreign tax (or the treaty-limited amount) and the UK tax on the same income (HMRC helpsheet HS263). Tax withheld above the treaty rate is not creditable; you would reclaim it from the source country.
- Newer arrivals should check whether the four-year foreign income and gains regime applies to them before filing.
United States
- US persons report the coupons as interest income on their federal return.
- Amounts must be in dollars; Eurobond coupons already are, which removes the conversion step.
- Foreign stock or securities not held in a financial account are reportable on Form 8938 (not FBAR) once your foreign assets pass the thresholds; held in a foreign brokerage account, the account itself counts towards FBAR. The IRS comparison page sets out which applies.
Canada
- Report foreign interest on line 12100 in Canadian dollars at the Bank of Canada rate in effect on the day the amount arises (CRA).
- Do not subtract any foreign tax from the income; claim it as a foreign tax credit on line 40500.
- Foreign property reporting (Form T1135) may also apply once your foreign holdings pass CRA's threshold; see reporting Nigerian accounts abroad.
Worked example
Example only. Funmi in Leeds holds US$200,000 face value of a Nigerian Eurobond with a 9% coupon paid twice a year. Each coupon is US$9,000. If HMRC's rate for the month of payment were US$1.30 to £1 (illustrative), she records £6,923.08 of foreign interest (9,000 ÷ 1.30). Two coupons a year at the same rate give £13,846.15. No Nigerian tax shown on her statement means no foreign tax credit to claim. Her brother in Atlanta reports the same US$18,000 directly in dollars.
What to check first
- Your broker's annual tax statement: gross coupon, any tax withheld, payment dates.
- The bond's offering circular, "Taxation" section, for Nigerian withholding.
- Your country's foreign asset reporting thresholds.
- Which exchange rate method your authority accepts. See exchange rates for declaring Nigerian income.
Mistakes that cost money
- Netting the tax. CRA tells Canadian residents not to subtract foreign tax from the income figure; report the gross coupon and claim any credit separately.
- Claiming more credit than the treaty allows. HS263 is clear that tax withheld above the treaty rate is not creditable in the UK. For interest, Article 11 of the UK–Nigeria agreement caps the source rate at 12.5%.
- Mixing exchange-rate methods. Using a monthly rate one year and a year-end rate the next makes the figures hard to defend. Pick a method your authority accepts and keep to it.
- Forgetting the asset forms. Coupon income and asset reporting are separate. A US resident can owe nothing extra on the coupon and still need to file Form 8938 or an FBAR.
- Assuming a broker abroad has done it. A Nigerian or offshore broker will not issue your home country's tax slips. The figures on your return are your responsibility.
Where Pryme fits
Coupons paid in dollars can be received into the USD side of a Pryme multicurrency account and stay in dollars until you choose to convert with Swap. Statements can be issued as verifiable documents, which helps when an adviser asks for proof of each payment.
Questions people ask
Is Nigerian Eurobond interest taxable in the UK?
Yes, for UK residents it is foreign interest reported through Self Assessment, converted into pounds, unless the foreign income and gains regime applies to you.
Does Nigeria withhold tax on Eurobond coupons?
We could not confirm this from an official source. Check the offering circular and your broker statement; if nothing is withheld, there is no credit to claim.
Do I report a Nigerian Eurobond on Form 8938?
Foreign securities not held in a financial account are reportable on Form 8938 once you pass the thresholds. If held in a foreign brokerage account, the account counts for FBAR.
Which exchange rate do I use in Canada?
The Bank of Canada rate in effect on the day the interest arises, according to CRA line 12100 guidance.
Sources
- DMO: Nigeria prices US$2.35 billion Eurobonds (5 Nov 2025) · accessed Oct 2026
- GOV.UK: Tax on foreign income · accessed Oct 2026
- HMRC HS263 Relief for foreign tax paid (2026) · accessed Oct 2026
- IRS: Comparison of Form 8938 and FBAR requirements · accessed Oct 2026
- CRA: Line 12100 – Interest and other investment income · accessed Oct 2026
- The Double Taxation Relief (Taxes on Income) (Nigeria) Order 1987, Schedule · 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.