Attorney No Jong-eon, Managing Partner of JONJAE Law Firm, Offers Expert Opinion on Tax-Evasion Structures Used by One-Person Entertainment Agencies

Hankook Ilbo, 2026. 2. 3. Report | Attorney No Jong-eon, Managing Partner of JONJAE Law Firm

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Hankook Ilbo published an in-depth report on allegations of tax evasion through celebrities' one-person agencies and the National Tax Service's strengthened enforcement. Attorney No Jong-eon, Managing Partner of JONJAE Law Firm, offered his expert opinion.

One-Person Agencies, from a 'Tax-Saving Trend' to a 'Target of Tax Evasion Crackdowns'

As it became known that singer and actor Cha Eun-woo received notice of an income tax assessment exceeding KRW 20 billion through a one-person agency (corporation) registered under his mother's name, the tax-avoidance structure of celebrities' one-person agencies has emerged as a social issue. Establishing a one-person agency to be taxed under corporate income tax, with a top rate of 26.4%, instead of the individual comprehensive income tax, whose top rate reaches 49.5% (including local tax), has recently spread among celebrities as a new 'tax-saving trend.'

The National Tax Service is intensifying enforcement, defining one-person agencies that merely collect payment for entertainment activities without any substantive function as 'paper companies for tax avoidance.' Before Cha Eun-woo, actors Lee Ha-nee, Park Hae-soon, Yoo Yeon-seok, Lee Joon-gi, and Cho Jin-woong also came under suspicion of tax evasion through one-person agencies and paid additional tax assessments ranging from hundreds of millions to several billion won.

Attorney No Jong-eon — "If This Is Considered Tax Saving, It Is Like Telling Every Office Worker to Set Up a Corporation and Get Paid a Salary"

Managing Partner No Jong-eon pointed out in this article that "if a case like Cha Eun-woo's is recognized as 'tax saving,' it would be tantamount to encouraging ordinary office workers to all set up corporations, receive salaries, and reduce their taxes." The National Tax Service's view is in the same context: a celebrity retains an existing management contract with their agency while using a separate corporation with no other function as a payment channel, which merely changes the taxpayer from an individual to a corporation.

The National Tax Service's Criteria for Determining 'Substantive Function'

As Hankook Ilbo analyzed pre-assessment review decisions, the criteria the National Tax Service presents when determining substantive function were identified in detail. First, there must be clear material and human substance, such as securing office space and hiring employees. Second, there must be documents such as appearance contracts or service outsourcing agreements made with the newly established corporation as a party. Third, there must be records showing that the corporation actually provided 'services'; office space and employees alone are not enough, and proof is needed that services appropriate to the income were provided.

The National Tax Service is not taking issue with the mere establishment of one-person agencies, but with the use of corporations that serve only as a 'conduit' without substantive function.