Why are so many American (spy) movies set in Europe?

First of all, many of the actual activities involving espionage happened, originally, against the backdrop of the Cold War. Obviously, having more different nations in a more compressed space gives a lot more chances for interactions.

If we take a U.S. spy, Jason Bourne, and send him on a mission, we must, by definition, deploy him to take actions against foreign agents and foreign governments. The genre can be described as "international espionage," so we need OTHER countries.... so, Europe. Middle East is also popular.

However, I do think this is your own Euro-centric viewpoint. A huge portion of the Jason Bourne films splits time between him tracking down his past in Europe, but also coming back to the USA, to infiltrate the CIA and its training facilities.

Here are some spy or international terrorism-based movie themes that pit US intelligence services against "bad guys" that are almost entirely based in the USA (most of these are actually pretty good, too):

• The Falcon and the Snowman (based on a true story)
• Three Days of the Condor
• The Devil's Own
• Blown Away
• The Siege
• Breach (true story)
• Enemy of the State
• Nighthawk
• Mercury Rising
• The Conversation
• The Osterman Weekend
• The Parallax View
• Sneakers
• No Way Out
• Clear and Present Danger
• Sum of All Fears

(I'm not sure about the ratio of USA domestic to foreign in those last two, but I think they're set mostly in the USA)

Many movies in the US backdrop focus more on law enforcement and FBI because our spy agencies are prohibited by law from performing espionage against domestic targets, so you get more of a law enforcement angle, like in the movie Betrayed about an FBI agent infiltrating a domestic terrorist organization.

Because a European setting is a standard part of the genre.

The genre of Spy Fiction was popularized by British writers during the Cold War. Being (sort of) European themselves, it is quite natural for said writers to stick to locales they and their readers would be most familiar with.

Also, the primary "theater" of the Cold War was in fact Europe, so it made sense that most Cold War spy activity would be set there. However, even pre-Cold War exemplars tended to be set in Europe.

Today non-British people write such works, and spying can happen anywhere, so other locales are used. However, the expectations of a genre are a really strong force. For example, there's no real reason why you couldn't write a "Western" set in central Asia, or Australia. Tom Selleck has done one of each. But we all know the standard setting is the western USA in the late 19th Century.

Who would the spies spy against, if the movie was set in the USA? In Europe there are lots of countries, so there can be lots of targets for espionage. Especially during the cold War, there was plenty of opportunity for espionage between eastern and western countries, but the current tensions between Russia and the West can also create interesting plots.

If set in the USA, the only thing the heroes could do was counter-espionage. This would get boring pretty soon. Outside the USA, an American (or US-allied) spy can have a different villain from a different country to fight against in every episode, and can be fighting alone against a large number of henchmen, something very unlikely to happen inside the borders of his own country. A spy drama usually has the lone hero exploring a hidden location on foreign soil, otherwise it would be a police procedural movie.

Domestic intelligence gathering is the domain of the FBI, and fighting bad guys on American turf is usually called law enforcement. This has an entire genre of its own.

Here are a few possible reasons...

Maybe US audiences see Europe as something of a melting pot - harmonious on the surface but with many deep underlying resentments. We've all fought each other many times, there are many former communist/soviet states and we share land borders with the Middle East and Russia so there are several wildly differing factions pushing against each other.

There's the option to show the hero as a "fish out of water" or "man of the world". Drop them into the middle of a foreign country and watch them either struggle with culture clashes or mix it with the locals. It may also give the writers the opportunity to show the hero's improvisational skills in unfamiliar surroundings.

Amazing locations. Narrow cobbled streets a brilliant for car chases.

It's boring to shoot action movies in the US. I cannot remember a single action movie set in I dunno South Dakota.

Slightly strange to hear that given the overwhelming number of action movies set in SF, LA, or especially New York. Of course, they're not necessarily shot there - you might have an establishing shot of stock footage of Manhattan then cut to a car chase in a trash-strewn alley that's actually in Toronto. Other US cities do seem to be under-represented in Hollywood. Then there's the entire genre of action films set in unpopulated states: the Western.

That article does point out an important influence on where a film is shot, though: cost. Plenty of countries have a lower cost of living than the US and/or offer tax breaks to filmmakers. The Czech Republic is one such, and has an impressive collection of castles and forests to film in and local stuntmen and crew to assist your on-location shooting. With a bit of set dressing and the same establishing aerial shot technique used to film NY in Toronto, Prague can stand in for anywhere in Europe.

Europe is a convenient setting because there are so many countries with varying languages and customs in close proximity. This functions as a showcase of the spies skills and preparation, that they can speak or understand many different languages fluently, navigate through cities in many different settings with ease (and often in high speed pursuit!), and often have fake passports for several countries. Also, at least for American spies, it makes sense that they would be spying on other countries rather than their own :)

I wanted to point out though that many of these franchises are filmed in many different locales, not just Europe. Mission Impossible has had heists take place in Asia, the Middle East and the US as well.

For the TLDR challenged: A ton of history available to further any absurd plot.

Any rotten brick in Europe has a far longer history than anything in the US. This allows the use of famous backdrops (Collosseum in Rome, Acropolis in Greece, Sagrada Familia in Spain, Castles in Germany, ...) But I'll give you that Europeans like movies shot in NYC, Chicago, LA, Frisco. It's the fascination of the unfamiliar.

The missing history also allows for aura-laden lineages of persons or families. The Rothschilds, the Medici, the British Aristocrats, Ancestors of Galilei, Kings and Queens (to this day! not just in the UK, also Denmark, Sweden, Spain), secrets hidden in paintings by the great painters, messages from the past, bat-shit crazy Illuminati--no bounds to a creative writer's mind! No way to place such action in Onehorsetown, Wyoming. (With apologies to Wyomingians(?), Wyomians? Wyomee?)

There's a lot of good answers already, so let me just add a few more reasons to the bunch:

• Europe seems scenic and exotic to many Americans. In part this is related to the common occurence of historical buildings or outright historical districts, in part simply through the nice balance of familiar and unfamiliar (or "funny" like with the typical stereotyping of European nations).
• The familiar unfamiliarity also means that when the screenwriters make mistakes, they might avoid detection by their main target audience; you also get a nice kick from your brain when you get the "Oh! I know where that is!" moment, which helps with enjoyment and emotional attachment to the movie. And of course, it may be easier to avoid offending Americans when you spend most of your movie "offending" Europeans (this also works for movies set in e.g. China, of course).
• There's a lot of potential for conflict - many individual nations, West vs. East (especially in a Cold War-ish setting) etc.
• Due to subsidies etc., shooting in Europe may be way cheaper than in the US. For example, during the time the Czech republic "encouraged" film-making, a lot of high profile movies (including spy movies) were shot in Prague. Some of those weren't set in Prague story-wise, despite being shot there - that probably classifies as a half-example. So there was a good chance that if your movie doesn't care too much about the setting, it would be rewritten to be European just because that's where you can do the filming cheap and easy; and even if it weren't set in Europe, it might have just been a reskinned Europe.

In the case of Jason Bourne, I would suspect it is more so because the novels it is based upon are set there. Why the spy novels are often set in Europe is another matter.

As many have suggested here this may be because of pre-existing influences on the Genre in film and novels. Particularly since prominent examples of the spy, mystery, and detective genres such as James Bond 007 and Sherlock Holmes originate in and are predominantly set in Europe.

One other concern for directors and location scouts regarding this subject that I've not seen anyone else mention is the architectural variance of filming outside of the US. Although there are generally not that many architectural styles on display even in Europe there are still many more than seen in typical US cities and town. This is simply a result of the age of the nation, the longer a civilisation sticks around the wider the range of building designs and thus our eyes are drawn to different surroundings. If you look at Europe in particular there are many styles, often very close to each other, meaning productions can make scenes visually arresting while also not blowing their budget on transportation or sets.

European spy fiction was largely based on Post World War II espionage. Europe still had colonies with geopolitical unravel. Communism was a growing thing in the Third World. So it was the main driving force for most plot lines.