Talking with our CAA FOI about this last week he claimed that it was to deal with helicopters and smaller business aircraft (a couple of our engineers own an FAA reg PA28) which are registered outside the EU, cannot transit back to their countries of registration and in some cases have been found carrying out illegal public transport across the EU, occasionally with dodgy maintenance backgrounds.
That's standard bollox.
The only Q is whether one has the will to live, and the time, to write yet another response every time some axe grinder comes up with this bollox on some pilot forum.
I see G-reg planes in far worse condition and with a lot more illegal maintenance than I ever see N-reg ones.
Typically for the EU they have used a sledge hammer approach because they have limited oversight of these aircraft and haven't taken into account the EU PPL holder who has an N reg machine for his convenience and has no intent to use it for anything but his own business/pleasure.
If I was going to do illegal charter than a G-reg is the best way because it won't draw attention around Europe. You can do AOC busting in any reg equally.
The EU CAAs do not actually have limited oversight. That is another piece of disinformation. They are within their rights to ground any plane which is unsafe. Each ICAO contracting state has total sovereignity within its own land and airspace. Every so often the UK CAA grounds some foreign 747 which has bits falling off it.
If the UK CAA was going to actually enforce strict airworthiness then most of the training fleet would be grounded tomorrow.