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In this paper the relevant legislation for the geothermal energy in the European countries and Serbia is reviewed. There is a variety of the incentives for the geothermal production which are well known throughout the European Union. The governmental policies for the support of the geothermal development have so far focused on the power generation only. It is necessary to make serious efforts in order to harmonize the legislation and to simplify the procedures of establishing and implementing the policies for boosting the direct use of the geothermal energy. The Law on Energy of the Republic of Serbia which was adopted by the Parliament and the Energy Development Strategy of the Republic of Serbia until 2015 have defined the privileged power producers, but only by passing the Regulation on the incentive measures for the production of electricity using the renewable energy sources combined with the production of electricity and the thermal energy, which came into force on January 1st 2010. [ABSTRACT FROM AUTHOR]