Cha Eun-Woo $13.7 Million Tax Evasion Case: ASTRO Member's 'Paper Company' To Public Apology - Full Controversy EXPLAINED

Cha Eun-Woo is embroiled in a massive tax evasion case that has been taking a toll on his professional image. Despite the ASTRO member personally issuing a public apology for leaving his fans disappointed,

things do not seem to end anytime soon for the K-pop idol-turned-actor. Eun-Woo is currently fulfilling his mandatory military service. But the 28-year-old is facing the heat from all corners. While his brand endorsements are pulling out, his upcoming K-drama The Wonderfools on Disney+ seems to be facing uncertaininty too. While legal community continues to debate whether the case could send Eun-Woo to jail, others point at the huge penalty he might need to pay. Incase you've just arrived, here's the entire timeline of Eun-Woo case, and the impact it will possibly leave on the South Korean star's career.

What is Cha Eun-Woo's case about?

On January 22, reports surfaced that Eun-Woo is allegedly involved in a tax evasion amounting to over 20 billion KRW (about $13.7 million). This was touted to be one of the largest additional tax assessments, including income tax ever imposed on a Korean celebrity. While he was under investigation by the National Tax Service, the report further stated that the assessment is reportedly part of a tax audit conducted in July last year, days before he enlisted for his mandatory military service.

Suspicion arose after Eun-Woo's "one-person agency" came under scanner which officials claimed was aimed at reducing income taxes. It was alleged that his case followed a pattern similar to recent tax evasion cases involving celebrities such as Sung Si-Kyung and Ok Joo-Hyun.

What is 'one-man agency'?

According to this setup, the celebrity or their family establishes a separate company despite being signed to an official entertainment agency. They sign a service contract with the main agency, allowing income to be redistributed in a way that lowers tax liability. Eun-Woo had allegedly established a corporation in the name of his mother, which was inserted between Fantagio and the star. The contract was meant to provide support services for his entertainment activities, and his earnings were divided between Fantagio, the corporation, and himself.

Fantagio's statement

Eun-Woo's agency Fantagio rejected the case and issued a statement on the same day. It read, "The core issue in this matter is whether the corporation established by Cha Eunwoo’s mother constitutes a substantive taxable entity. This matter has not yet been finally confirmed or officially assessed, and we plan to actively provide explanations through lawful procedures regarding issues related to the interpretation and application of the law."

Brands begin retracting

Banks and consumer brands including Shinhan Bank and skincare label Abib quickly reacted to the case. The companies set advertisements featuring Eun-Woo to private on their social media accounts. Wellness firm BodyFriend is even reportedly considering replacing him in its promotional campaigns.

Mother's company address fake?

Netizens claimed that the address under which the corporation under Eun-Woo's mother was registered to LNC Company was in Incheon, Ganghwa-gun. But some social media posts claimed the address appears to correspond to a grilled Eel restaurant, and not an entertainment or management office. It is known that the restaurant is run by Eun-Woo's parents. It took no time for users to call it a "paper company" given the suspicious location.

Legal community discusses Cha Eun-Woo's punishment

Even as the singer-actor awaits the outcome of a pre-assessment review requested to challenge the National Tax Service's ruling, law firms discussed the repercussions. In a YouTube video, a lawyer from Nova Law Firm, Lee Don-Ho stated whether the agency actually provided services to the idol, or conducted business with offices, employees, and actual work. He said the money it generated would become Eun-Woo's personal income and would be taxed if the investigation showed that it was generated from his work as an artist and image. If the case falls under contradicting interpretations of tax laws resulting in underreporting, it would become "tax avoidance." This would exempt the singer from criminal charges.

Eun-Woo hires NewJeans' legal firm

According to reports, Cha Eun-Woo has hired top law firm Sejong and is preparing to take legal action against the tax office's assessment. With legal support now in place, his team is expected to focus on showing that the company set up by his mother was not a shell entity, but a legitimate firm that genuinely provided services related to his entertainment work. Notably, the firm had earlier made headlines for handling NewJeans' exclusive contract termination case.

Cha Eun-Woo's apology

On January 26, Eun-Woo broke silence and issued a statement directly under his name for the first time. Offering an apology, Eun-Woo said he would accept the authorities' final decision and live more carefully going forward. "In the future, I will reflect on myself more rigorously and live with a greater sense of responsibility," he wrote. He further clarified that his enlistment was not meant to avoid the controversy, but happened because it could not be delayed further. "I am indescribably sorry for not even being able to repay but to have caused great pain and fatigue to all those who believed in and supported me despite my inadequacies and to the many people I have worked with. I will faithfully participate in the tax-related procedures in the future."

Fantagio's second statement

Cha Eun-Woo's agency dropped another statement on January 27, apologising for the inconvenience caused to many people by the recent developments. "We feel a heavy sense of responsibility for the controversy stemming from matters involving our company and our artist. The allegations are currently being verified in accordance with the tax authorities’ procedures. Both the agency and artist are cooperating with the investigation within the scope of their respective obligations. Once the legal and administrative decisions become clear, we will responsibly implement the necessary measures based on the findings," a portion of the statement read.

Cha Eun-Woo's upcoming projects

Known for popular K-dramas like Gangnam Beauty, Rookie Historian Goo Hae-ryung, True Beauty, Island, A Good Day to Be a Dog, and Wonderful World, will next be seen in The Wonderfool. The show also stars Park Eun-Bin, Kim Hae-Sook, Choi Dae-Hoon, Im Seong-Jae, and Son Hyun-Joo. In light of Eun-Woo's tax evasion scandal, now faces uncertainty ahead of its scheduled release later this year.