UPDATE! PROBLEM SOLVED!!!
Everything is working flawlessly now! As I see there is a lot of people with the same problem, I’ll tell you what I have done. First of all I have uninstalled Xiaomi Home app, leaving only Yeelight installed (both of them were installed), then I opened Google home, then went through add, setup device, then “I have something already set up”. Here I have deleted Xiaomi home account, I then tapped on Yeelight account and choosed reconnect. This is what fixed the issue I guess, but for the sake of completeness I’ll also tell you that right after I have also added in Google home another the RGB bulb I had laying around (a V1 in this case, which was already registered in a light up). After that I have tried again and and both the colour palette in in Google home and the color voice command for Google assistant started working again flawlessly!
I was using Frankfurt server and I haven’t changed that.
UPDATE:
I have later re-installed Mi Home app and everything is still working from any of the method I choose to send the light commands (yeelight app, mi home app, google home app or google assistant voice commands). Great! 