Silicon Valley in the United States is undoubtedly still the choice of many tech firms to kick off their business. But that trend is not as solid as it once was. Many tech firms are now moving all around the globe and surprisingly, tax rates don’t have much to do with it at all. Snap, the mother company behind Snapchat, has now chosen London as the city for its international headquarters. What could be the motivator behind the decision?
London and the United Kingdom overall is known to have a much higher corporate tax rate than most places. So, this obviously would not have been a major factor in decision making for Snapchat. Other companies such as Uber and even Google have created international setups in lower tax demanding economies. Uber has set itself up in Luxembourg and is part of an ever-growing trend.
Snapchat will still have an office in the US, but any international dealing will be done by their UK based office from now onwards.
Why Snapchat Made the Decision?
For Snapchat, there is limitless opportunity in the UK. Some sources are even calling it a move specifically made following Brexit and showing confidence in the UK tech industry.
What seems like some of the biggest reasons are the fact that Snapchat believes that they have a better range of advertising clients there and millions of Snapchatters. To be precise, a press statement was made by Snapchat General Manager, Claire Valoti:
“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.”
There are 75 staff members of Snapchat in London at the moment and that number will certainly swell in coming days.
Snapchat Looking for Revenue Generation
What may come as a surprise for many Snapchatters, the company is still looking at ways to make money off the service. The service which attracts millions of unique users on a daily basis is not making much money off of their hugely popular app. Despite the loyal following of Android and iOS users around the world, Snapchat is confident that they will start making some serious money following a better organized setup.
Advertising will be a primary source of income for the company and they believe that this move could also be a boost for the UK advertising sector as well. There is a boom of talent in which Snapchat believes it can also benefit from, so a multi-thronged strategy is actually in play here.
The tech firm is set to make $1 billion in 2017, but will that be enough to sustain operations and show future growth? Let’s see what happens in the months to come after UK operations for Snapchat continue to expand.
What do you think about the tech firm moving over to the UK for its international headquarters? Let us know in the comments section below or on the TechBizWeb Facebook page.