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No it isn't. Discrimination of PERSONS is illegal (i.e. by religion or color) - Entire countries is perfectly legal.
You can also deny service to EU citizens outside your own country (OVH did this a long time, was sued, and won in French court), just not to EU citizens inside your country (not a loophole - designed to prevent abuse of healthcare and alike in other EU member countries).
What is this - entire country? Probably group of persons, so discriminate one person is illegal, but discriminate group of persons legal?
VENOM is ready to change this position! xD
That is correct, you can have only national service, but if you go international, you cannot distinguish between customers based on EU country.
So, 2 cases: National service only, all other countries excluded, or all other EU countries included.
https://www.digitalocean.com/company/blog/update-on-CVE-2015-3456/