A legal community analysis has emerged regarding Artsto member and actor Cha Eun-woo, who is facing the largest tax evasion allegations among domestic entertainers.
On the 24th, Lee Don-ho, principal attorney at Nova Law Office, said on his YouTube channel, "As a result of the National Tax Service investigation, suspicions have been raised that income was distributed through a corporation established in the name of his mother to evade taxes. The point is that income was distributed through a corporation established in his mother's name. On the surface it appears to be corporate revenue, but in substance isn't it personal income?" he said.
Attorney Lee Don-ho analyzed, "The first issue is whether this corporation actually conducted business. Even if an office, staff and work actually existed, if the corporation was created to attribute income that was not corporate income to an individual, and expenses were recorded by that corporation and taxes were paid, it can be judged as tax evasion. Under the principle of substance over form in taxation, one looks at who actually earned the money rather than the name. If the income was generated by an individual's labor and image, it can be re-taxed as personal income even if it is under a corporate name."
He added, "However, using a corporation does not automatically mean tax evasion. A comprehensive judgment must be made on whether real services were provided, whether the contract structure was normal, and whether there was intent to avoid taxes. It will be an important case showing the boundary between tax saving and tax evasion for everyone who uses family corporations as sole proprietors."
The Seoul Regional Tax Service's Fourth Investigation Division last year conducted a high-intensity investigation into Cha Eun-woo on suspicions of tax evasion through a one-person agency established by his mother. Cha Eun-woo had been active with his agency Fantagio and the one-person agency his mother set up entering into service contracts for supporting entertainment activities, and income was reported to have been evenly divided among Fantagio, the one-person agency and Cha Eun-woo, but the National Tax Service viewed the one-person agency established by Cha Eun-woo's mother as a paper company that did not actually provide services.
The National Tax Service judged that Cha Eun-woo and his mother set up a corporation and distributed income to reduce income tax by as much as 45%, using a trick that applied a corporate tax rate 20 percentage points lower than the income tax rate, and amid that finding Cha Eun-woo's camp said, "This matter's main issue is whether the corporation established by Cha Eun-woo's mother falls under substantive taxation, and it is not currently a matter that has been finally determined or notified, and we will actively provide explanations through proper procedures regarding the issues of tax law interpretation and application. The artist and tax representatives will sincerely cooperate so that the procedures can be completed promptly," they said.
Amid the disgrace of facing the largest tax evasion allegations against a domestic entertainer, suspicions arose that Cha Eun-woo used tricks to avoid taxes, and allegations were also raised that viewers and fans were deceived after the management company established by Cha Eun-woo's mother was reported to have an address listed as an eel restaurant operating on Ganghwa Island in Incheon. Fantagio said, "unable to confirm," and declined further comment.
Meanwhile, Cha Eun-woo enlisted last year. His expected discharge date is Jan. 2027.
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