SNAP AND TAXES

Snap is bucking tech trends again, by expanding in London over Dublin

Obsession
Brexit
Obsession
Brexit

Bucking the tech sector’s love of Ireland, Snapchat parent company Snap has selected London for international expansion.

Snap, which is preparing for an anticipated $25 billion IPO, told the Financial Times (paywall) that it chose the United Kingdom to be close to its 10 million daily UK users, as well as brands who buy advertising on the app. Snap will use its London office, established in 2015, to book all its sales outside the US.

An earlier version of this post reported Snap’s move as selecting London for its international headquarters. Snap insists this is not the case, and that its sole headquarters is in Los Angeles. However, the London office will book revenue for all non-US markets. That arrangement is likely to change in the future, with sales being booked in each country Snap has offices in, according to Snap.

London marks a departure from what has now become a trend among global tech companies: Thanks to Ireland’s favorable corporation tax rate—12.5%, compared with 20% in the UK—Apple, Facebook, and Google all opted for Dublin or other Irish cities as their non-US base of operations. Tech firms with UK offices typically book sales through their Irish companies, and some have found ways to reduce their tax bills even further, an arrangement known as “the double Irish.”

Tech companies are now feeling the backlash from these hugely advantageous tax arrangements. Apple is currently fighting the European Union over a €13 billion tax bill that the European Commission says it owes Ireland, and both Facebook and Google have cut deals with the British tax authority.

But old habits die hard. Google’s tax deal with the UK was lambasted for being paltry (Facebook, which will even book some sales in the UK, did slightly better). By booking all its non-US revenue through its UK office, Snap will bypass this wrangling entirely.

Snap’s decision can also be read as a victory for the UK in attracting a rising tech star to its shores, despite the uncertainties cased by the Brexit vote. Of course, the British government may have offered incentives to Snap for choosing London. the Department for International Trade, the main government liaison for foreign firms setting up in the UK, has responded to queries from Quartz.

 

In just over a year, Snap has grown its London office to 75 employees, and currently has 15 vacancies advertised. Several of those roles focus on advertising operations, and design-related work on Snapchat lenses. Only one is listed as a software engineering role.

This story was updated with Snap’s statement on London’s status and how it would book its revenues in future.

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