This study investigates annual water balance conditions and their spatiotemporal variability under a wide variety of atmospheric driving conditions in the periglacial permafrost catchment of Two Boat Lake in Western Greenland. The study uses and combines a comprehensive hydrological multi-parameter dataset measured at the site with site conceptualization and numerical model development, application and testing. The model result reproduces measured lake and groundwater levels, as well as observations made by time-lapse cameras. The results highlights the importance of numerical modeling that takes into account and combines evapotranspiration with other surface and subsurface hydrological processes at various depths, in order to quantitatively understand and represent the dynamics and complexity of the interactions between meteorology, active layer hydrology, lakes, and unfrozen groundwater below permafrost in periglacial catchments. Regarding these interactions, the water flow between the studied lake and a through talik within and beneath it is found to be small compared to other water balance components. The modeling results show that recharge and discharge conditions in the talik can shift in time, while the lake and active layer conditions in the studied catchment are independent of catchment-external landscape features, such as the unfrozen groundwater system below the permafrost and the nearby continental-scale ice sheet.