Inland satellite altimetry has gained traction over the past decade and is now routinely used to monitor the water levels of rivers, lakes and reservoirs. The accuracy of such inland water height measurements, at least from radar altimetry is still relatively poor from a geodetic viewpoint, namely in the range of several decimeter. Accuracies from spaceborne laser altimetry, in particular from the ICESat-2 mission, are at cm-level, however, and further progress in the radar altimetry domain is expected from swath-based altimetry by the SWOT mission, (to be) launched December 2022. With accuracies down to cm-level one needs to reconsider the height system definition of inland lake surfaces as obtained from satellite altimetry. Conventionally one subtracts a global geoid model from the altimetry-derived ellipsoidal height to obtain an orthometric height. Without wind stress, seiches and other time-variable height disturbances the lake water surfaces will conform to equipotential surfaces in the Earth’s gravity field. Thus lake surfaces are surfaces of constant dynamic height, from which follows that a lake surface cannot be a surface of constant orthometric or normal height. Because equipotential surfaces are inherently non-parallel, two points at a lake surface can and will have different orthometric height. Although being well-understood in physical geodesy, we will here model this effect and quantify it for various case studies. We demonstrate that the effects can be as large as a few dm for large lakes at high altitudes, which is an order of magnitude that is relevant in terms of satellite altimetry error levels.