The global shift towards natural refrigerants has highlighted carbon dioxide (CO2) as a superior alternative for building heating. Transcritical CO2 heat pumps adapt well to variable space heating demands and large temperature differentials in hot water production. The transcritical cycle behaviour of CO2, featuring a unique temperature glide during heat rejection and favourable properties, offers an excellent adaptation to cold climates. However, developing dynamic models for transcritical CO2 heat pumps that can support efficient control and performance optimisation remains limited, mainly due to the high nonlinearities of CO2 thermo-fluid behaviour and processes. In this study, a dynamic simulation model of a transcritical CO2 heat pump was developed and validated using experimental data from a laboratory-scale system composed of a compressor, gas cooler, internal heat exchanger, evaporator, expansion valve, and liquid separator. The model was created in MATLAB Simscape. A sensitivity analysis of key operational factors such as expansion valve setting, discharge pressure, and compressor suction superheat was performed to investigate their effect on the energy performance metrics. The results demonstrate that the dynamic model effectively replicates the system's coefficient of performance (COP) and heating capacity across a wide range of operating conditions, with minor discrepancies at certain lower discharge pressures near the critical point of CO2. Despite these limitations, the model closely aligned with experimental data trends, particularly for gas cooler inlet and outlet temperatures. The optimal COP was found around 82 bar, close to the actual system.