The same in Italy.
I have two valid payment methods: Paypal and Credit card.
Both works for buying on App Store, Apple Pay and iCloud.
I receive the aforementioned error after accepting the agreement.
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My suspect is that this issue is related to the new Apple TV+ subscription.
Here are my clues:
1) It started around November 2019, exactly when AppleTV+ debuted
2) In the response of the API that returns status code 406 when I accept the agreement, there is a property userLocale: "en-US" even if my locale is it-IT
3) If I go to my AppleId section on my iPhone and try to display the country/location, I receive a message "there is an Apple TV+ subscription that needs to be removed in order to change location" (roughly translated from Italian)
So... if in a couple of days I won't hear from Apple, I'll try removing my trial AppleTV+ subscription and taking one for the community.
I'll let you know if that works.