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The short answer
For a US citizen or resident, coupon interest on Nigerian Eurobonds is taxable foreign-source income, reported in US dollars on your return whether or not you get a Form 1099. If your interest and dividends exceed $1,500 or you have a foreign account, you file Schedule B. Any Nigerian tax actually withheld may qualify for a foreign tax credit, and a bond held outside a US brokerage account can count toward Form 8938. Selling the bond gives a capital gain or loss.
Nigerian Eurobonds attract US-based Nigerians because they are sovereign debt paying coupons in hard currency. The US tax treatment is not complicated, but it depends on how you hold the bond, and that decides which forms apply.
The coupon is taxable income
IRS Publication 550 (for 2025 returns) says US citizens must report investment income from outside the United States unless it is exempt by US law, whether they live in the US or abroad and whether or not the foreign payer sends a Form 1099. Treat Eurobond coupons as taxable interest unless your preparer identifies a specific US exemption.
- Currency. Amounts on a US return must be in dollars. If a coupon is paid in dollars, there is nothing to convert. If any amount arrives in another currency, the IRS says to use the exchange rate prevailing when you received it; it has no official rate and accepts posted rates used consistently.
- Schedule B. The Schedule B instructions require it if your taxable interest or ordinary dividends exceed $1,500, or if you had a financial interest in or signature authority over a foreign account. Line 7a asks about foreign accounts; answer it accurately even if you do not need an FBAR.
Where you hold the bond changes the paperwork
| How you hold it | Interest reporting | Form 8938 | FBAR |
|---|---|---|---|
| US brokerage account | Usually on the broker's 1099-INT | Not reported: the IRS excludes US-based brokerage accounts | No (US account) |
| Nigerian broker or bank custody account | No 1099; you report from statements | The foreign account counts, if thresholds are met | The account counts toward the $10,000 aggregate |
| Held directly in your name outside any account | No 1099; you report from coupon records | Bonds of a foreign issuer held outside an account count | Not an account |
The IRS's basic questions and answers on Form 8938 (reviewed 17 August 2026) list notes and bonds issued by a foreign person among specified foreign financial assets when held outside a financial account, and say assets inside a foreign account are reported only as the account. Form 8938 thresholds for a single filer living in the US are more than $50,000 at year end or more than $75,000 at any time; for married filing jointly, $100,000 and $150,000. For buying through a US broker, see Nigerian Eurobonds through a US brokerage.
Nigerian tax and the foreign tax credit
Check your custodian's coupon statement for any Nigerian tax withheld. If tax was withheld and it is a foreign income tax, the IRS foreign tax credit rules may let you credit it against the US tax on the same income, limited to the US tax attributable to your foreign-source income. If your only foreign income is passive, your foreign taxes are $300 or less ($600 joint) and they are shown on a payee statement such as a 1099-INT, you can claim the credit without Form 1116. Unused credit can be carried back one year and forward ten. There is no US–Nigeria income tax treaty: Nigeria does not appear on the IRS's A to Z list of treaty countries, so no treaty rate applies. See the foreign tax credit for tax paid in Nigeria.
Buying between coupon dates, premiums and discounts
Eurobonds trade between coupon dates, so the price you pay usually includes interest accrued to the seller. Publication 550 has sections on bonds sold between interest dates, bond premium amortisation and market discount; each changes how much of the coupon and any gain is taxable to you. Keep the trade confirmation showing clean price, accrued interest and settlement date, and give it to your preparer.
Selling or redeeming the bond
A bond held for investment is a capital asset. IRS Topic 409 says a gain or loss on a capital asset held more than one year is long-term, reported on Form 8949 and Schedule D. Your basis is generally what you paid, adjusted for any premium or discount rules you apply.
Worked example
Example only, with illustrative figures. You hold $20,000 face value of a Nigerian Eurobond with an 8% coupon paid twice a year, in a US brokerage account. Each coupon is $800; for the year, $1,600 of interest, reported on the broker's 1099-INT. Because it exceeds $1,500 you file Schedule B. If you are in the 22% bracket, federal tax on the coupons is about $352. No Nigerian tax was withheld, so there is no credit to claim. Being in a US account, the bond is not on Form 8938.
Funds that hold Eurobonds
Owning Eurobonds through a Nigerian mutual fund is different: the fund may be a PFIC, with its own reporting and tax regime. See dollar Eurobond funds and PFIC risk.
Where Pryme fits
Pryme does not sell bonds. If coupons are paid to you in dollars and you later need naira for family or a project, a Pryme Personal Account keeps the dollars as dollars until you choose to Swap; the app shows the rate and the fee before you approve.
Questions people ask
Is Nigerian Eurobond interest taxable in the US?
Yes, for US citizens and residents. Publication 550 says investment income from outside the US is reported unless exempt by US law, whether or not you receive a 1099.
Do I need Form 8938 for Nigerian Eurobonds?
Not if they are held in a US brokerage account. If held through a Nigerian account or directly outside an account, they count toward the Form 8938 thresholds, from $50,000 at year end for a single filer in the US.
Is there a US–Nigeria tax treaty for bond interest?
No. Nigeria is not on the IRS list of US income tax treaty countries, so no treaty rate applies. A foreign tax credit may still apply to Nigerian tax actually withheld.
How is a gain on selling a Nigerian Eurobond taxed?
As a capital gain or loss. Held more than one year, it is long-term under IRS Topic 409 and reported on Form 8949 and Schedule D.
Sources
- IRS: Publication 550 (2025), Investment Income and Expenses · accessed Oct 2026
- IRS: Instructions for Schedule B (Form 1040) (reviewed 30 Apr 2026) · accessed Oct 2026
- IRS: Foreign currency and currency exchange rates (reviewed 22 May 2026) · accessed Oct 2026
- IRS: Foreign tax credit, how to figure the credit (reviewed 9 Jul 2026) · accessed Oct 2026
- IRS: Basic questions and answers on Form 8938 (reviewed 17 Aug 2026) · accessed Oct 2026
- IRS: United States income tax treaties, A to Z (reviewed 3 Jan 2026) · 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.