Cha Eun-woo, currently signed with Fantagio, is accused of setting up a separate corporation under his family's name to distribute income and reduce tax liability. The National Tax Service has reportedly ordered him to pay over $150 million in additional taxes, including income tax. However, this decision is not final, as there are still avenues for appeal.
The controversy intensified when it was revealed that the corporation's previous address was registered at a restaurant in Incheon, operated by Cha's parents, raising questions about the corporation's actual operations.
The $150 million tax bill is considered unprecedented among Korean celebrities, drawing attention to the possibility of criminal charges beyond tax penalties.
Legal experts caution against jumping to conclusions about criminal charges at this stage, emphasizing the importance of determining intent and the corporation's legitimacy.
Noh Jong-eon, a representative lawyer at Law Firm Jonjae, told TenAsia, "Establishing a one-person corporation is not illegal for celebrities, but the key issue is who actually received the income." He noted that Cha Eun-woo's case is unique because a family-owned corporation was involved in the financial arrangements despite his existing contract with Fantagio. "If the settlement funds were directly transferred to the corporation without passing through Cha Eun-woo's personal account, the tax authorities might argue intent," he added.
Noh also mentioned that if intent is proven, the applicable laws could change. "If the National Tax Service determines this was intentional tax evasion, it could fall under the Act on the Aggravated Punishment of Specific Crimes, which applies if the annual evaded tax exceeds $7.5 million," he explained.
However, he stressed that this would only apply if intent and the actual tax evasion structure are clearly proven, requiring multiple steps including criminal charges, investigation, and court judgment.
Hyun Young-woo, a representative lawyer at Law Firm Jooyeon, also stated, "While criminal charges cannot be completely ruled out, the tax decision is not yet final, and discussions on criminal liability can only occur after further investigation and appeals."
Hyun added, "The $150 million tax bill is an administrative decision and separate from criminal charges. Whether the Punishment of Tax Evaders Act or the Act on the Aggravated Punishment of Specific Crimes applies depends on the National Tax Service's decision to file charges, the investigation results, and proof of intent."
Regardless of the legal outcome, Cha Eun-woo's image is likely to suffer. Known for his clean and exemplary image, he has been a model for various sectors, including advertising, education, and finance. The tax controversy alone could affect public trust.
Brands featuring Cha Eun-woo have reportedly taken precautionary measures, such as making his advertisements private. An advertising industry insider commented, "Regardless of the legal outcome, the image risk is real, and future activities may face certain restrictions."
Reporter Jung Se-yoon, TenAsia yoon@tenasia.co.kr