In Japan, it's generally believed that 'German tap water isn't fit to drink,' but this is incorrect.
Literal
Japan [at-では], 'Germany [gen-の] tap-water [topic-は] drinking [to-に] not-suited' [quotative-と] generally being-thought-[but-が], this [topic-は] error is.
An informational correction. 日本では is the locative/contextual 'in Japan.' 水道水 ('tap water') is a compound. 適さない is the negative of 適する ('to be suitable'). ~と考えられている ('is thought, is believed') is a passive-state construction common in formal writing, giving the impression of neutral reporting. 誤り ('error, mistake') is the noun. A corrective piece of writing typical of travel guides or encyclopedic entries.