That makes sense. For company that has a few potential customers in a region with complex legislation it may make sense to get avoid those customers because of cost of complying with the legislation may be higher than what the customers are worth.

A similar example is that many banks outside the US prefer not to have US citizens as customer. This is also because complying with US laws is more costly than the money made from US citizens.

When it comes to smaller retailers, that is probably due to the EU tax rules. That's a pity. But possibly hard to improve.