Specifically which parts of Europe? It's a big place, and I have given negative references with no fear of liability. And that includes across EU borders, including the UK.
But just like the UK press can't describe anyone as 'tired and emotional' anymore these days, because that particular euphemism for 'drunk' has become transparent, many of the traditional German euphemisms for sub-par work have been attacked by the courts.
I'm currently in the UK, and at least here I've been told by legal that a negative reference can lead to massive issues in front of an Employment Tribunal, and that it's effectively not worth it when we can just decline to give any reference at all.
On the flip side, a reference has an implicit duty of skill and care to both the former employee and the person asking for the reference, so an overly-positive reference can also lead to legal liability from the person asking for the reference.