The Scandinavian country has become the largest private equity market in Europe in recent years, relative to the size of its economy, with deals worth almost $5 billion agreed in 2011.

But the boom, which has continued with recent deals for alarms firm Securitas Direct and cable group Com Hem, drew the attention of Sweden's tax authority.

Now many of the industry's top earners are bracing for back tax claims as investigators trawl through tax returns and earnings declarations going back to 2005.

"We are working on another couple of private equity firms," Goran Haglund, tax auditor at the Swedish Tax Agency, said, adding tax bills could be issued by Christmas.

Around the world, private equity bosses are often better paid even than investment bankers and the biggest part of their pay - performance fees known as carried interest for making profits on deals - is taxed at lower rates than income tax.

For private equity firms and their partners, who earn multi-million dollar fees on buying and selling companies, the tax savings by exploiting such loopholes can be significant.

But the Swedish Tax Agency wants to tax the majority of private equity bonuses at the highest income tax rate of 55 percent, not at the capital gains rate of up to 30 percent.

Private equity partners argue they deserve preferential treatment because they are betting their own money. But many firms only contribute between 1 and 3 percent of the capital in a fund, while taking 20 percent of the profits as bonuses.

Sweden's private equity industry has been under scrutiny since 2007, when a spate of high-profile deals, including the buyouts of healthcare businesses Capio and Gambro, led to a pilot study into Nordic Capital and IK Investment Partners.

Tax authorities noticed private equity firms were paying tax at low rates or, in some cases, not at all. And the ensuing crackdown is being fought by the private equity industry, which argues it is unfair particularly because it is retrospective.

The crackdown could make Sweden one of harshest tax regimes for private equity in the world, but is in tune with global

moves to target buyout bosses and close tax loopholes.