Cha Eun-Woo Alleged Tax Evasion

Reports have emerged stating that Cha Eun-woo has been notified by the National Tax Service (NTS) of a tax penalty exceeding 20 billion KRW for alleged income tax evasion. This is considered an unprecedented amount for a penalty imposed on an individual entertainer. According to a report by Edaily on the 22nd, this notification follows a tax audit conducted prior to Cha Eun-woo’s military enlistment in July of last year. Cha Eun-woo’s representatives have reportedly challenged the NTS’s decision by filing a "Request for Review of Adequacy of Tax Internal Audit" (pre-assessment review) and are currently awaiting the results. The investigation was carried out last spring by the 4th Investigation Bureau of the Seoul Regional Tax Office. The core issue lies in Cha Eun-woo’s income structure. The NTS believes that "Company A"—a corporation under his mother’s name—was inserted between Cha Eun-woo and his agency, Fantagio, to disperse income. While Fantagio and Company A had contracted for celebrity management support services, effectively splitting the revenue among the three parties, the NTS has determined that Company A is a "paper company" that provided no actual services. The NTS views this as a deceptive tax-saving tactic, where income was funneled through a non-existent corporation to take advantage of lower corporate tax rates compared to individual income tax rates. In this process, Fantagio was also reportedly hit with billions of won in penalties last year for allegedly processing false tax invoices. However, Cha Eun-woo’s side has completely denied these allegations. His representatives stated, "When the stability of his entertainment activities was jeopardized due to changes in the agency's leadership, his mother established the company to directly manage and protect his career." They further countered, "Company A is a legitimate business officially registered in the popular culture and arts planning industry; it is not a paper company." If the pre-assessment review is accepted, the penalty will be cancelled. However, if it is dismissed, he must pay the taxes according to the NTS notice. Even then, legal battles can continue through appeals to the NTS or the Tax Tribunal. It is reported that this investigation originally began with tax evasion allegations involving Fantagio’s major shareholders, rather than Cha Eun-woo himself. In the process of tracking transactions between companies, Company A—linked to Cha Eun-woo—was included in the investigation, which subsequently expanded into a personal audit. As the NTS has not yet reached a final verdict, all eyes are on the upcoming results of the adequacy review.