Projected future warming of the Arctic will result in pronounced degradation of permafrost and thereby trigger large-scale landscape and ecosystem changes. In this context, the formation and expansion of thermokarst lakes play a key role as thermokarst dynamics represent a mechanism for abrupt degradation of permafrost soils. Using the process-based model CryoGrid-3 coupled to a model description of lake dynamics (FLake), we explore how the thermal and hydrological state of different permafrost landscapes is affected by an explicit consideration of the interaction between lakes and surrounding permafrost environments. Hereby we especially investigate the role of lateral fluxes in affecting the landscape heat and water budgets.