diff --git a/modules.local/ppcp-webhooks/services.php b/modules.local/ppcp-webhooks/services.php
index 8ea0f2e3e..033d34d40 100644
--- a/modules.local/ppcp-webhooks/services.php
+++ b/modules.local/ppcp-webhooks/services.php
@@ -5,6 +5,7 @@ declare(strict_types=1);
 namespace Inpsyde\PayPalCommerce\Webhooks;
 
 use Inpsyde\PayPalCommerce\Webhooks\Handler\CheckoutOrderCompleted;
+use Inpsyde\PayPalCommerce\Webhooks\Handler\PaymentCaptureRefunded;
 use Psr\Container\ContainerInterface;
 
 return [
@@ -29,6 +30,7 @@ return [
         $logger = $container->get('woocommerce.logger.woocommerce');
         return [
             new CheckoutOrderCompleted($logger),
+            new PaymentCaptureRefunded($logger),
         ];
     }
 ];
diff --git a/modules.local/ppcp-webhooks/src/Handler/PaymentCaptureRefunded.php b/modules.local/ppcp-webhooks/src/Handler/PaymentCaptureRefunded.php
new file mode 100644
index 000000000..b454ef9b2
--- /dev/null
+++ b/modules.local/ppcp-webhooks/src/Handler/PaymentCaptureRefunded.php
@@ -0,0 +1,90 @@
+<?php
+declare(strict_types=1);
+
+namespace Inpsyde\PayPalCommerce\Webhooks\Handler;
+
+use Psr\Log\LoggerInterface;
+
+class PaymentCaptureRefunded implements RequestHandler
+{
+
+    private $logger;
+    public function __construct(LoggerInterface $logger)
+    {
+        $this->logger = $logger;
+    }
+
+    public function eventType(): string
+    {
+        return 'PAYMENT.CAPTURE.REFUNDED';
+    }
+
+    public function responsibleForRequest(\WP_REST_Request $request): bool
+    {
+        return $request['event_type'] === $this->eventType();
+    }
+
+    public function handleRequest(\WP_REST_Request $request): \WP_REST_Response
+    {
+        $response = ['success' => false];
+        $orderId = isset($request['custom_id']) ? (int) $request['custom_id'] : 0;
+        if (! $orderId) {
+            $message = sprintf(
+            // translators: %s is the PayPal webhook Id.
+                __('No order for webhook event %s was found.', 'woocommerce-paypal-commerce-gateway'),
+                isset($request['id']) ? $request['id'] : ''
+            );
+            $this->logger->log(
+                'warning',
+                $message,
+                [
+                    'request' => $request,
+                ]
+            );
+            $response['message'] = $message;
+            return rest_ensure_response($response);
+        }
+
+        $args = [
+            'post__in' => [$orderId],
+            'limit' => -1,
+        ];
+        $wcOrders = wc_get_orders($args);
+        if (! $wcOrders) {
+            $message = sprintf(
+            // translators: %s is the PayPal refund Id.
+                __('Order for PayPal refund %s not found.', 'woocommerce-paypal-commerce-gateway'),
+                isset($request['resource']['id']) ? $request['resource']['id'] : ''
+            );
+            $this->logger->log(
+                'warning',
+                $message,
+                [
+                    'request' => $request,
+                ]
+            );
+            $response['message'] = $message;
+            return rest_ensure_response($response);
+        }
+
+        foreach ($wcOrders as $wcOrder) {
+            /**
+             * @var \WC_Product $wcOrder
+             */
+            $wcOrder->update_status(
+                'refunded',
+                __('Payment Refunded.', 'woocommerce-paypal-gateway')
+            );
+            $this->logger->log(
+                'info',
+                __('Order ' . $wcOrder->get_id() . ' has been updated through PayPal' , 'woocommerce-paypal-gateway'),
+                [
+                    'request' => $request,
+                    'order' => $wcOrder,
+                ]
+            );
+        }
+        $response['success'] = true;
+        return rest_ensure_response($response);
+    }
+}
\ No newline at end of file