The Reasoning Behind Snapchat's Unusual Decision To Open Its European HQ in the UK

Snap has a large installed base in the UK and evidently believes it's online status will enable working around the post-Brexit business complications causing financial services and manufacturing firms to change their domiciles to 'European' addresses. Their potentially huge IPO may also insulate them from the consequences should this prove to be a mistake.

Whether Snap is being clever or imprudent and arrogant will become clearer over time. 

Lara O'Reilly reports in Slate:

Snap confirmed it would not be routing sales made in the U.K. through other European countries for tax reasons, saying sales in countries where Snap does not have a local office or salesforce would also be booked in the U.K. "We believe in the UK creative industries. The UK is where our advertising clients are, where more than 10 million daily Snapchatters are, and where we've already begun to hire talent."

Snap, the parent company of Snapchat, has chosen to base its international headquarters in the U.K., the Financial Times first reported.

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The move is unusual for a U.S.-based tech firm. Companies including Facebook, Uber, and Google have chosen other European countries including Ireland and the Netherlands as their international base to take advantage of lower corporation tax rates.

Snap confirmed it would not be routing sales made in the U.K. through other European countries for tax reasons, saying sales in countries where Snap does not have a local office or salesforce would also be booked in the U.K.

Claire Valoti, the general manager of Snap Group Limited in the U.K., said in a statement: "We believe in the UK creative industries. The UK is where our advertising clients are, where more than 10 million daily Snapchatters are, and where we've already begun to hire talent."

Snap first opened its U.K. office in 2015, and it now has 75 staff members there, many of whom have been hired from rival tech firms. Valoti was hired from Facebook at the end of 2015, and other recent hires include Ricky Leatham from Amazon, who leads the U.K. engineering team, and Andy Pang, who joined from Instagram to lead the company's measurement division in the region.

Snap Group Limited resides in a three-floor office in London's Soho neighborhood, but the company says it is set to open an additional site nearby.

Snap confidentially filed paperwork with the U.S. Securities and Exchange Commission last year to go public in 2017. The company is seeking a valuation of $20 billion to $25 billion, a source familiar with the matter told Business Insider in November.