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It requires every person to have the same Steam Store Country (this may require a recent purchase to set the country code on the account).
There is a workaround though, log into the PC of the person who tries to invite you with your Steam account and start any game for 1-2 minutes. After that they switch back to their account and send out the invite.
It will now work since for Steam your last login and play session location will be the same as the Steam Family inviter.
After you joined the family it does not really matter where you are, its just the invite that needs you to be physically close.