Lapland and the North Pole are the most common answers to this question however neither are correct. Santa Claus is in fact from Turkey.
Saint Nicholas, who is the real Santa Claus lived and performed miracles on the south-western Turkish town of Demre. His miracles commonly involved children and in one, he brought back to life 3 children who had been chopped up by a local tavern owner and kept in a brine tub.
His kindness to children explains his suitability as a Christmas saint, however he is also the patron saint of judges, pawnbrokers, thieves, merchants, bakers, sea travelers and surprisingly, murderers!
Italian sailors stole St Nicholas' miraculously myrrh exuding bones in 1087 and Turkey is still demanding their return today.
In the rest of Europe, St Nicholas was combined with older and darker mythological types. In eastern Germany he is known as Shaggy Goat, Ashman or Rider.
Many people know Santa Claus as the jolly man portrayed in the 'Coca Cola' adverts, although this version of Santa Claus existed well before he appeared in the Coca Cola adverts and is derived from Clement Clarke Moore's 1823 poem 'A Visit from St Nicholas' (better known as 'The Night before Christmas.)
The North Pole, Lapland and elves
It is not clear, however, when the North Pole and the factory of elves were introduced and attached to the story. Though by 1927, this idea was established enough for the Finns to claim that Santa Claus lived in the Finnish Lapland, due to the fact that no reindeer could live at the North Pole because there was no lichen, the reindeer's main source of food during the Winter.
Santa's official post office is in Rovaniemi, the capital of Lapland and he receives over 600,000 letters a year. Some people have capitalized on this modern image of Santa by setting up their own 'Santa Mail' business where parents can pay to have a personalized letter sent to their child from 'Santa' such as santamail.org, making a lot of money in the process.
In 1969, the Vatican demoted St Nicholas' saint's day (6 December) from obligatory to voluntary observance in 1969, possibly due to his secular success.
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