It just seems like a case of "we want it to be as painful as possible for you, even if we have to take a bit of additional pain for us too".
Who cares about domain registration revenue? The only reason it isn't free is because of the administrative hassle of distributing frivolous domain registrations.
If EU citizens are confused about UK companies disappearing, maybe they'll search and be exposed to EU competitors, how could that be a bad thing?
Even a bunch of people who by rational assessment would count as British can reasonably say the British fucked them over because of a series of Tory policies, first destroying the paperwork which proves they came here by invitation (on the Empire Windrush and other ships), and then insisting that since they don't have that paperwork if they haven't already secured citizenship papers they were never authorised to be here and must be sent "home" - in some cases forcibly deported to countries they hadn't been to in more than half a century. See "Windrush scandal".
If EU wanted to make more money on it, it would have made it available for everyone from the start. If it doesn't... well, it just means domain-selling is not the core EU-business. So it's exactly one of the 2: either Russian and Japanese companies should be allowed to own *.eu domain, or British ones shouldn't. And I don't honestly care which one is it. But it cannot be both at the same time.
So, no, it's not about hurting you, it's simply about the fact that the world doesn't revolve around you. As surprising as it may sound.
If I somehow owned tax.gov, and was running a tax prep service from it, I doubt the “I’m grandfathered” argument would fly.
It’s likely similar to lawyers.eu (I made that domain up), etc; people should be able to expect that to be an EU based service, not something overseas.
But in the other scenario, they now have to deal with support queries ("why can they have a .eu when I can't?"), possibly legal action ("why can they have a .eu when I can't?"), etc.
...which would have some British businesses grandfathered in and therefore have a loophole that some enterprising lawyer can no doubt make a great deal of hay with.
I think only micronations have a significant revenue coming from tlds (e.g. Tuvalu)
Think of it as a UX reason rather than financial.
1. The .eu TLD is supposed to signify that a business using it is part of the EU. That means EU consumers will know that EU regulations such as GDPR apply, they're unlikely to pay import/export taxes, etc. Allowing non-EU businesses to use it dilutes the purpose and value of the TLD.
2. The EU wants to avoid making freeloading look like a viable strategy. If Britain is able to leave the EU and still reap all the benefits of being an EU member, then what's the point of other nations staying in the EU? Domain names are obviously only a minor benefit of being in the EU but there's a reason this policy is being applied mostly across the board.
There are many ways to skip it, but it blocks at least some.