More like a derivative, they consistently port stuff over from Lineage, which is just a distribution of Android, which is in turn based on a gazillion other OS project starting from Linux.
In the end either it's good enough to have the "headquarters" of this specific project in Europe, no version of Android can be considered European enough, as it all depends way too heavily on Google.
There is also a decent chance of Google making Android closed source in the medium term anyway, but the last several releases of Android have not exactly added mindblowing features, and I don't have a tremendous amount of interest in whatever kind of enshittified cloud dependent AI infested mess they have planned next.
And you think Fairphones are made in Europe? They are made in China, just like all the iPhones and Google Pixels.
Fairphone is indeed Dutch, and they even make a point on their website of paying a decent living wage to all Chinese workers making their phones.
Typed from my Fairphone 4 running /e/OS