Cha Eun-woo’s $13.7 million tax row explained: Why it’s one of South Korea’s biggest controversies right now

Few scandals hit harder in South Korea’s celebrity world than tax allegations, and this one involves one of its most bankable stars.

Cha Eun-woo, singer-actor and member of ASTRO, is facing scrutiny from South Korea’s National Tax Service (NTS) over an alleged 20 billion won (around $13.7 million) tax shortfall, linked to a company registered under his mother’s name. While he has not been criminally charged, the case has already triggered commercial fallout and intense public debate.

Here’s what we know so far.

The core allegation: A 'paper company' under his mother’s name

According to tax authorities, the controversy centres on a corporation allegedly established by Cha Eun-woo’s mother, widely reported as Cha’s Gallery, along with later successor entities.

Investigators believe the company may have been used to channel Cha Eun-woo’s entertainment income in a way that allowed it to be taxed at lower corporate rates, rather than higher personal income tax brackets that can reach 45 per cent in South Korea.

The NTS (South Korea National tax service) reportedly concluded that the firm lacked real business substance, what’s commonly referred to as a “paper company”, leading to the assessment that taxes were underpaid by more than 20 billion won.

How the income structure raised red flags

While Cha Eun-woo is officially represented by Fantagio, tax officials allege that his earnings were split between Fantagio, the company under his mother’s name, and Cha himself. Authorities argue this structure reduced his tax burden by more than 20 percentage points.

If that assessment holds, legal experts estimate the underlying income involved could exceed 100 billion won, placing this among the largest tax disputes involving an individual entertainer in South Korea.

Evading or avoiding? Why classification matters

Legally, everything hinges on how the case is classified.

• Tax evasion would require prosecutors to prove that the company was created primarily to conceal income, opening the door to criminal charges.

• Tax avoidance, on the other hand, would be treated as a civil dispute, meaning Cha Eun-woo would only need to pay the unpaid tax, with no trial.

Nova Law Firm attorney Lee Don-Ho explained in a YouTube analysis that investigators will assess whether the company:

• Had actual offices

• Employed staff

• Performed legitimate contractual work

“Using a corporation alone does not equal tax evasion,” he noted. “The question is whether it functioned as a real business.”

Dispatch’s findings: A family business network

The Korean outlet Dispatch’s investigation added further complexity, reporting that:

• Cha’s Gallery was founded in July 2019

• Cha Eun-woo was listed as CEO

• His mother was an internal director

• His father handled finance

The company’s official scope spanned 34 business areas, from artist management and music production to theme parks and food services, an unusually broad remit for a single entertainer.

By 2022, its registered address had moved to Ganghwa Island, the same location as Cha’s parents’ eel restaurant, a detail that later fuelled online speculation.

The company was dissolved in 2024, after which Cha’s mother reportedly established new entities, including D ANY LLC, allegedly intended for managing Cha’s assets. Dispatch noted that as recently as January 2026, the registered address appeared unfinished and unused, raising further questions.

Agency response: Strong denial, legal challenge filed

Fantagio has firmly denied wrongdoing, stating that:

• Cha Eun-woo has filed a pre-assessment review to contest the NTS findings

• No final determination has been made

• The company under his mother’s name is a legitimate cultural and arts planning entity

“The key issue is whether this company qualifies as a valid subject of taxation,” Fantagio said, adding that Cha will continue to fulfil all legal obligations.

The agency itself was reportedly hit with a separate 8.2 billion won tax assessment connected to the case.

Commercial fallout: Brands pull back

Even without formal charges, the impact has been swift.

Several brands, including Shinhan Bank and skincare label Abib, have quietly removed or hidden advertising content featuring Cha Eun-woo. Wellness brand BodyFriend is reportedly reviewing whether to replace him in ongoing campaigns.

The reaction underscores how tax controversies, even unresolved onescan damage celebrity endorsements in South Korea’s risk-averse advertising industry.

What happens next

Cha Eun-woo is currently serving his mandatory military duty, limiting his ability to address the issue publicly.

The outcome now rests on the pre-assessment review, which will determine whether the case remains a civil tax dispute or escalates into a criminal investigation.