Das Kleid (1991)

Poor weavers Hans und Kumpan try to enter a town surrounded by a tall, impenetrable wall, where everyone is apparently very happy. When they finally make it inside, the tyrannical Emperor Max demands they make him new clothes that would "bring all creatures to their knees." Hans and Kumpan claim only intelligent people can see the robe, and in order to prove himself clever, the emperor haughtily displays himself before his subjects wearing his new invisible regalia.