> stuff to German users, are you doing business in Germany

Yes, and the VAT must be paid. You'd need to have some EU member state registration to do so (and still pay the correct VAT-rate, it's different per country). If it's business-to-business it'd be somewhat different.

>but still ship there

The local folks will have to customs-clear it themselves, pay the import tax AND the VAT. It's doable but very consumer unfriendly and likely won't be doing much business at all.

With the regards to topic - the tax is still very much paid.