Market - - Jan 10,2017
Snap, the company behind Snapchat, has decided to establish its first international headquarter in London, where it will book all sales made outside the US.
The California-based tech giant, which has 150 million daily users worldwide is reportedly preparing for a $25 billion stock market float on Wall Street. It said that the UK is a great place to build a global business with strong creative industries.
The move is a significantly unusual as other major tech companies like Apple, Google and Facebook have set up their non-US headquarters in Ireland where tax regimes are fairly low. Companies like Microsoft, Twitter and Uber among others, have also chosen the Netherlands and Luxemburg to set up their European base.
A spokesman for the company said that the move was a smart decision that aligned its tax affairs with the business itself. Presently, Snap has only 75 employees in the UK, as well as more than 10 million daily users.
Snap Group Limited — the company’s new UK entity — will register revenues from the sales made to customers in the UK and sales in any other country where Snapchat has no local entity or salesforce. Initially, the Snapchat teams in France, Canada, Australia and Saudi Arabia will be booked through the UK.
The company is a start-up and is yet to turn any profit, as it is in the earliest stages of generating revenue outside the US and is unlikely to have significant tax liabilities as yet. But it is expanding its advertising quickly from a small US base, with research company eMarketer forecasting Snapchat’s ad revenue to grow from an estimated $367 million last year to almost $1 billion this year.
There are high expectations of job creations in the company’s new office, especially for engineers. It will also boost the British sector after the Brexit vote.