Venable partner Friedemann Thomma was interviewed in a January 19, 2017, Law360 article on the recent move by Snap, Inc., the parent company of popular messaging app Snapchat, to book its overseas ad revenue through a new London office. Under the plan, the company will continue to pay local taxes in countries where it has branches, including the United States, but revenue generated in other countries will be processed through London.
"It sounds like a very deliberate move and smart move to recognize that transferring revenues is consistent with their corporate structure and economic reality of where value is created and where its people are, but it also undoubtedly is accompanied with the convenient factor that by recognizing revenue in the U.K., their overall tax liability is probably being reduced," said Thomma. Noting that Ireland has a lower tax rate, he said it was possible that other business realities and economic benefits outweighed the smaller tax bill. "Anybody who does tax planning will take a comprehensive viewpoint on all costs and benefits associated with an international structure, and the closer the delta is between high tax and low tax [rates], the less favorable an aggressive structure gets."
Discussing Snap's move in light of last year's Brexit vote, Thomma said, "Initially for the U.K., Brexit was a completely destabilizing move, which now, in the light of all these recent movements given that there is some doubt about the future of the [European Union], might actually be turning into a stabilizing approach."