MESSENGER start-up Snap, owner of Snapchat, has said it will set up its non-US headquarters in London.
The plan bucks the trend of a number of high-profile US technology companies to base themselves in low tax EU countries like Ireland.
The Los Angeles-based tech company, which already has offices in London, will book most non-US sales through the UK and pay taxes here.
UK corporate tax, which the Conservative government has significantly reduced in recent years, will fall to 19% in April this year, and will be 18% by 2020. The US corporate tax rate can be as much as 40%, although Donald Trump has announced plans that he will lower the corporation tax to 15%.
Snap, which plans a $25bn (£20.6bn) float in the US this year, claims to have 150m daily active users around the world, 50m of which are in Europe.
For non-US sales, US tech giants, including Apple, Facebook, Google, Uber and Twitter, have established international headquarters in EU countries with lower corporate tax rates than the UK, such as Ireland and Luxembourg.
But with the OECD’s push to tackle corporate tax avoidance in industrialised countries and governments’ crackdown on multinationals that shift profits around to pay little or no tax, companies are looking again at where to best establish themselves outside of the US.
The European Commission is investigating so-called sweetheart tax deals with multinationals and last year demanded Apple pay the Irish government €13bn (£11.2bn) in back taxes. Apple is appealing against the ruling.
Snap Group Limited, the company’s UK business, opened offices in London just over a year ago and plans to open a new office near its current Soho location. It currently has 75 staff and hopes to hire more in the coming months.
“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,” said Claire Valoti, general manager of Snap Group in the UK.