Snapchat sets up headquarters in London, U.K.

Snap Inc., the company behind messaging app Snapchat has chosen to build its European headquarters in U.K.

Snap Inc. is primarily known for its Snapchat messaging app that is particularly in among teens and millennials. It has changed its corporate name to Snap to reflect its ambitions far beyond the messaging app and began selling Spectacles, a pair of sunglasses that are outfitted with a tiny camera.

According to City A.M., the multi-billion-dollar firm originally based in Los Angeles, which is expected to go public this year, will book its UK sales here and from those countries where it has no legal entity, renouncing the jurisdictions often favored by US tech companies such as Ireland, Luxembourg, and the Netherlands.

The Wall Street Journal also reported Snap Inc. is gearing up for an IPO in the U.S. that could value the startup as much as $25 billion, the tax strategy could boost investor transparency - while possibly avoiding any distracting criticism or scrutiny of its overseas tax arrangements.

The said tax arrangements have attracted intense scrutiny in recent years, triggering an international effort to close loopholes as well as probes into whether firms such as Apple Inc. have been unfairly paying too little tax.

The decision to create a cleaner structure also is a lot easier for Snap Inc. than for other tech firms which have set up their headquarters around the world even before new scrutiny of the various tax strategies.

But why London?

London offers a large, well-educated English-speaking labor pool, access to nascent tech research hubs like the Universities of Cambridge and Oxford, and a well-regarded international legal and business regime. Despite economic uncertainty surrounding Britain's vote to leave the EU, tech companies including Apple have since announced London expansion plans.

Claire Valoti, General Manager of Snap Group in the U.K. said "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."