Australia, Germany in tax talks

Australia and Germany are starting negotiations to update a tax treaty between the two countries that stretches back 40 years.

Treasurer Joe Hockey says the discussions will focus on maximising the efficiency of the trade and investment relationship with the world's fourth largest economy and Australia's tenth largest trading partner with $16 billion worth of trade.

It will aim to tighten tax rules to address multinational profit-shifting, while updating a double taxation agreement that was signed in 1972 to reflect the changes in both economies since then.