Continued warming of the Arctic will likely accelerate terrestrial carbon (C) cycling by increasing both uptake and release of C. Yet, there are still large uncertainties in modelling Arctic terrestrial ecosystems as a source or sink of C. Most modelling studies assessing or projecting the future fate of C exchange with the atmosphere are based on either stand-alone process-based models or coupled climate-C cycle general circulation models, and often disregard biogeophysical feedbacks of land-surface changes to the atmosphere. To understand how biogeophysical feedbacks might impact on both climate and the C budget in Arctic terrestrial ecosystems, we apply the regional Earth system model RCA-GUESS over the CORDEX-Arctic domain. The model is forced with lateral boundary conditions from an EC-Earth CMIP5 climate projection under the representative concentration pathway (RCP) 8.5 scenario. We perform two simulations, with or without interactive vegetation dynamics respectively, to assess the impacts of biogeophysical feedbacks. Both simulations indicate that Arctic terrestrial ecosystems will continue to sequester C with an increased uptake rate until the 2060-2070s, after which the C budget will return to a weak C sink as increased soil respiration and biomass burning outpaces increased net primary productivity. The additional C sinks arising from biogeophysical feedbacks are approximately 8.5 Gt C, accounting for 22% of the total C sinks, of which 83.5% are located in areas of extant Arctic tundra. Two opposing feedback mechanisms, mediated by albedo and evapotranspiration changes respectively, contribute to this response. The albedo feedback dominates in the winter and spring seasons, amplifying the near-surface warming by up to 1.35 degrees C in spring, while the evapotranspiration feedback dominates in the summer months, and leads to a cooling of up to 0.81 degrees C. Such feedbacks stimulate vegetation growth due to an earlier onset of the growing season, leading to compositional changes in woody plants and vegetation redistribution.