Territory's head welcoming a southern European (10)
I believe the answer is:
palatinate
'territory's' is the definition.
(Palatinate is an example)
'head welcoming a southern european' is the wordplay.
'head' becomes 'pate' (humorous term for the head).
'welcoming' means one lot of letters goes inside another (in sense of 'inviting in').
'southern european' becomes 'Latin' (Latin can mean someone from Italy).
'a'+'latin'='alatin'
'pate' going around 'alatin' is 'PALATINATE'.
(Other definitions for palatinate that I've seen before include "old territory" , "province" , "princely land" .)