Bayern Munich have been in imperious form this season and currently hold a 17 point lead in the Bundesliga table after defeating Werder Bremen 6-1 over the weekend. The Bavarians are also doing well in the cup competitions with a 3-1 lead over Arsenal in the last 16 of the Champions League and will play Borussia Dortmund on Thursday for a spot in the semi-finals of the DFB-Pokal.
Magath believes that Bayern are the top side in Europe with their unstoppable brand of football under Jupp Heynckes.
"After Barcelona's defeat at Milan you have to assume they are [the best side in Europe]," he told Die Welt.
"I am convinced they will reach the Champions League final. They are playing better than ever before. In any case, I have never seen them better. They have been able to play on that level since the start of the season. If they continue to keep it up chances are good that they can win the title.
"Jupp Heynckes does a great job. Without diminishing his work, I believe, the current shape Bayern are in, the extreme position play is down to Louis van Gaal. The club profits from the work he has done.
"Heynckes has taken on the structures and elaborated them, that is as important and valuable."
Pep Guardiola is set to take over Heynckes at the helm of Bayern at the end of this season but Magath doubts that Guardiola can do much to improve the team.
He added: "FC Bayern have hired a top man, but expectations will be enormous. This can also turn out to be a problem if expectations are fuelled which, as they are too high, he has to fall short of.
"When I say Bayern play better than ever before, [I ask] how could Guardiola make them better? And just imagine if Jupp Heynckes wins three titles. There'd be none left for Guardiola."