The coalition's plans to crack down on Britain's tax havens were discussed at a meeting between David Cameron and chancellor Angela Merkel, amid growing concerns in Germany. Merkel is understood to have had questions about the monitoring of British sovereign territories used as tax havens by the rich.

The German public has been alarmed in recent weeks about reports of its citizens using havens to avoid paying taxes at home, and the matter has become an electoral issue. But sources close to Cameron said that he was first to raise the future of the territories in order to spell out how his government was cracking down on tax avoidance in places such as Jersey and Guernsey.

A Downing Street spokesman said the prime minister was keen, ahead of June's G8 summit in Northern Ireland, to stress that the UK and others "should show global leadership by taking concrete action on tax evasion and aggressive tax avoidance and making clear that everyone must pay their fair share of taxes".

The two leaders also agreed on the "urgent need" to make Europe more "competitive and flexible", according to Downing Street. The spokesman added: "They discussed how we can work together in the runup to the May and June European councils to make further progress."

In his keynote speech on Britain's future in Europe earlier this year, Cameron pledged to hold a referendum during the early part of the next parliament – by the end of 2017 at the latest – if the Tories win the next general election. He has argued a new settlement is needed before UK voters are asked if they want to end ties with Brussels.

A Downing Street source said there was agreement from Merkel that there would be the necessary treaty change at some point although there has been no agreement yet on timing or the substance of the changes.

After the meeting outside Berlin, Number 10 said both had also agreed that they wanted faster progress on trade deals between the EU and the rest of the world and that the EU should be prepared to make an "ambitious offer" in trade talks with the US.

The prime minister arrived in Berlin with his family on Friday and was staying at Schloss Meseberg, the chancellor's official guest residence in the Brandenburg countryside.

A spokesman said that areas of agreement were also found on Syria and Afghanistan.

He said: "The PM updated the chancellor on the trilateral talks with presidents Karzai and Zardari and they discussed how the international community should work in partnership with Afghanistan to support the country beyond 2014.

"On Syria, they share grave concerns about the deteriorating situation and the ongoing bloodshed. They agreed that the UK and Germany should keep working together to find ways to increase the pressure on Assad and his regime while also strengthening the moderate opposition."