See code is changed by European (7)
I believe the answer is:
diocese
'see' is the definition.
(both can mean a bishop's associated area)
'code is changed by european' is the wordplay.
'changed' is an anagram indicator.
'by' is a charade indicator (letters next to each other).
'european' becomes 'E' (abbreviation e.g. EU).
'code'+'is'='codeis'
'codeis' with letters rearranged gives 'dioces'.
'dioces'+'e'='DIOCESE'
(Other definitions for diocese that I've seen before include "District under a bishop's authority" , "Bishopric" , "Area under bishop" , "Bishop's area" , "Jurisdiction of a bishop" .)