Hello @Evangelos Dimitriadis ,
Thank you for reaching out to the Microsoft Q&A platform. Happy to answer your question.
But what happens in the case of North and West Europe?
Entire Europe is considered as one geographical cluster, hence the North Europe is the paired datacenter for West Europe.
Can an Azure VM be configured in such a way that it is sure that data (disks) will only be copied inside West Europe?
No, we don't have such an option. If you need to have another local copy of the VM within same region which you can use any time you want to do a disaster recovery, Azure Site Recovery(ASR) Zone to Zone replication is the option. Here is a link for ASR DR replication between different zones in same region.
In general for the data residency, azure controls planned maintenance and recovery prioritization for regional pairs. Some Azure services rely upon regional pairs by default, such as Azure redundant storage.
Does it make any difference if locally-redundant storage or zone-redundant storage is being used?
Yes, as you might know, Azure Storage always stores multiple copies of your data so that it is protected from planned and unplanned events, including transient hardware failures, network or power outages, and massive natural disasters. Redundancy ensures that your storage account meets its availability and durability targets even in the face of failures.
Locally redundant storage (LRS) replicates your data three times within a single data center in the primary region.
Zone-redundant storage (ZRS) replicates your Azure Storage data synchronously across three Azure availability zones in the primary region
For details, refer to https://learn.microsoft.com/en-us/azure/storage/common/storage-redundancy
If Azure can guarantee that data stays in West Europe region, does this also apply for an Azure VM that is getting started from a image obtained by the Marketplace?
This is based on what data redundancy approach is chosen. Zone redundant data is always stored in same region but across three Azure availability zones in the primary region. Each availability zone is a separate physical location with independent power, cooling, and networking.
Please "Accept as Answer" and Upvote if any of the above helped to help others in the community looking for remediation for similar issues.