The Arctic is already experiencing changes in plant community composition, so understanding the contribution of different vegetation components to carbon (C) cycling is essential in order to accurately quantify ecosystem C balance. Mosses contribute substantially to biomass, but their impact on carbon use efficiency (CUE) - the proportion of gross primary productivity (GPP) incorporated into growth - and aboveground versus belowground C partitioning is poorly known. We used (13) C pulse-labelling to trace assimilated C in mosses (Sphagnum sect. Acutifolia and Pleurozium schreberi) and in dwarf shrub-P. schreberi vegetation in sub-Arctic Finland. Based on (13) C pools and fluxes, we quantified the contribution of mosses to GPP, CUE and partitioning. Mosses incorporated 20 ± 9% of total ecosystem GPP into biomass. CUE of Sphagnum was 68-71%, that of P. schreberi was 62-81% and that of dwarf shrub-P. schreberi vegetation was 58-74%. Incorporation of C belowground was 10 ± 2% of GPP, while vascular plants alone incorporated 15 ± 4% of their fixed C belowground. We have demonstrated that mosses strongly influence C uptake and retention in Arctic dwarf shrub vegetation. They increase CUE, and the fraction of GPP partitioned aboveground. Arctic C models must include mosses to accurately represent ecosystem C dynamics.