This is a common misconception. Prostitution is legal but unregulated. This is the latest ruling of the Constitutional Court on the issue of prostitution.

Please note that it wasn't illegal even before and was more of gray area - before this ruling from 2022 prostitution itself was not illegal per se, however the income received from such work was not considered a valid income source so people practicing it could not legally declare income. After this ruling prostitution is now a legal income source.

I've read some analysis on the legislature regarding prostitution in Bulgaria, and from what I recall the issue is that the legislative has not made prostitution itself illegal because it would be very difficult to define what prostitution is without opening the room for prosecuting regular people as well. For example if you define prostitution as exchanging sex for money, gifts or favors, then does it mean that if you buy an expensive gift for your girlfriend and you have sex later that day, the prosecution can prosecute you for that? Or if someone has sex with someone in exchange for a favor (like getting a promotion or something like that) - at what point are you breaking the law and getting prosecuted? So basically the legislative has decided that prostitution is too complex and it would be better to stay out of it and ignore it. At the same time until recently it was not a valid income source, so sex workers could be prosecuted for tax evasion, unless they were creative, but that was changed too in 2022.