SUMMARY We have recorded for 13 d, geomagnetic variations simultaneously on the Earth's surface and in a borehole at 832 m depth straight below, with a sampling rate of 1 Hz. In addition, geoelectric variations were observed at the same site near Bad Konigshofen in Frankonia, Germany. The penetrated moderately conductive Triassic sediments lie above highly resistive Permian deposits. A presumably crystalline basement begins at 1500–1900 m depth. The purpose of the experiment is to determine the skin effect of geomagnetic variations and to derive from it the equivalent to the magnetotelluric (MT) surface impedance, using the vertical gradient (VG) method of electromagnetic (EM) sounding. In this way, we were able to reproduce all four elements of the MT impedance tensor, except for an unexplained but consistent downward shift of VG phases against MT phases by roughly 15° for the two off-diagonal elements. Hence, our tensor evaluation goes beyond the common practice, to express the skin effect by a single VG transfer function in response to a layered structure. The otherwise good agreement of VG and MT results implies that at our test site, the MT impedance tensor is largely distortion-free and that, for example, its pronounced anisotropy should be regarded as a genuine characteristic of the EM response for a laterally non-uniform or possibly anisotropic deep structure. The drilling site lies within the range of a widespread induction anomaly. We have observed the resulting variations of the vertical magnetic component at the surface and in the borehole and found them to be identical. The thus established absence of a skin effect for the vertical component allows us to treat the sedimentary layer down to the depth of the borehole instrument as a thin sheet, and the pertinent thin-sheet approximation for EM induction forms the basis of our analysis. We have derived the required estimate of conductance from the skin effect of horizontal components, noting that this estimate has to be real valued and the same for all frequencies. We were unable, however, to verify the resulting value of 76 S with independent geoelectric direct current (DC) measurements in the borehole and at the Earth's surface. A model study shows that the thin-sheet conductance, which is relevant for the skin effect, may be substantially higher than the depth-integrated conductivity from DC data. Robust estimates of transfer functions were derived for 20 frequencies from 5.625 to 0.007 cpm, which corresponds to periods from 10 to 10000 s. Squared skin effect coherencies are above 0.9 for periods longer than 20 s and thereby comparable to MT coherencies.