Snapchat is set to open its new worldwide headquarters in London in yet another post-Brexit business boost. The LA-based company has a small team of 75 staff in Soho but is planning to move into new offices nearby and employ more workers. Google, Apple, Facebook and Twitter have all chosen to have their headquarters in Ireland to take advantage of its generous tax breaks – even though their biggest international offices are in London. Snapchat, a mobile messaging service and fast-growing social media platform, is now valued at $25billion and is increasing in size by 30 per cent a year.It has 150million daily users worldwide and up to 10million here in Britain. It is a major boost for Britain because it will have to pay tax on its international profits in the UK. Income tax and national insurance paid by staff and the business respectively will also go to the Treasury. Snap Group Limited, the company’s new UK arm, said: ‘I am happy to confirm that the UK is the Snap Inc. family’s hub outside the US. The UK’s strong creative industries make this a great place to build a global business.’
The business has grown from six staff in the UK to 75 in the past year. When its new offices are built they will recruit even more workers. Claire Valoti, General Manager of Snap Group Limited in the UK: ‘We believe in the UK creative industries. The UK is where our advertising clients are, where more than 10m daily Snapchatters are, and where we’ve already begun to hire talent.’ Snap’s decision comes ahead of its initial public offering (IPO), which could see it list as early as March.
It would be the biggest flotation since Chinese e-commerce giant Alibaba’s IPO in 2014.Snapchat launched in 2012 as a free mobile app allowing users to send photos that expire within seconds.Its parent group announced last September it was renaming the company to Snap Inc as it develops further products, including sunglasses with a built-in video camera. The group’s decision to base itself in London comes amid public and political anger over tax avoidance measures used by multi-national groups and US technology giants in Europe. In November Google gave Britain a Brexit boost by creating 3,000 new jobs to be housed in a new £1billion London super-headquarters – but still faces calls to pay its fair share of tax.
The huge investment threw cold water on warnings from Remainers that global firms would shun the UK following the vote to leave the EU. Google – which employs 4,000 people in the UK – has commissioned a new ten-storey building with a floor space of 650,000sq ft, equivalent to more than ten football pitches. It has already committed to a further two buildings on the King’s Cross Estate, which will eventually house 7,000 workers across three offices. Google has faced damning criticism because despite having thousands of staff it insists that it has no ‘fixed base’ in Britain. It means that Google’s overseas tax rate on all its profits falls to around five per cent when in the UK it would have to pay 20 per cent. Apple is to create a new London headquarters inside the £9billion Battersea Power Station development for up to 3,000 staff – but it probably won’t pay more UK corporation tax. The Grade II listed building on the Thames with its iconic towers is key a feature of south London’s skyline and will now become home to some 1,400 Apple workers but with room for more than double that figure.
The tech giant will occupy six floors – about half a million square feet of office space – in the central boiler house of the former coal-fired power station. But it appears Apple has no plans to move its international headquarters from Cork to the UK, where it currently takes advantage of Ireland’s lower tax rate.This arrangement allows the tech giant to funnel its non-US profits through its Irish offices, described by the EU as having no staff or premises, then on to its $178billion (£120bn) offshore fund. Fast food chain McDonald’s announced in December that it is moving its non-US tax base to Britain from Luxembourg as it battles EU regulators over its tax affairs. The chain is creating a new UK-based holding company through which its non-US royalties will be routed and it will pay UK corporation tax on its international profits. The EU’s competition commissioner Margrethe Vestager has put the tax affairs of a number of high-profile targets including Amazon and Google under the microscope. Earlier this year, the EU slapped US tech giant Apple with a 13 billion euro (£11.4 billion) tax bill.