International debt collection: Is garnishment of a PayPal account balance possible?

Numerous (online) shops offer PayPal as a payment method. The balance of such a PayPal account often shows considerable amounts of funds, which can be an interesting asset for the debt collection.

What does balance on a PayPal account mean?

Under Dutch law, the balance displayed on the user’s PayPal account represents the amount of electronic money available for payments through PayPal. If the user wants to pay another PayPal user, he authorizes PayPal to transfer the electronic money from his account to the other account, in accordance with the payment order. The user also has the option to transfer the money back to a "regular" bank account.

A certain monetary value (the amount displayed on the account) is stored on PayPal’s servers as a digital number. PayPal grants the user of the account the right to make payments up to a certain amount (the available balance). The user has obtained this right by depositing the actual money into the PayPal account.

In short, the balance on a PayPal account is not “real” money, but a claim against PayPal in the amount of the balance.

Garnishment of the account balance

The garnishment of a PayPal account is a so-called third party garnishment, just like account attachments. The third party (in this case PayPal) is levied for all that the debtor (the account holder) has to claim from PayPal. According to Dutch law, PayPal must declare the amount of the balance on the debtor's account after the seizure. PayPal must then transfer the amount to the creditor.

International attachment

According to the PayPal Terms and Conditions, the account user enters into an agreement with PayPal (Europe) S.à r.l. et Cie, S.C.A., established in Luxembourg. That makes it an international repossession case.

A Dutch judgment cannot simply be enforced abroad. A seizure under Dutch law is only possible on goods that are on Dutch territory. For attachment of claims by third parties, this means that the third party must be domiciled in the Netherlands.

Under Dutch law, the domicile of a legal person is not only the place of its registered office, but also the place of any office or branch with regard to matters that the office or branch are “involved” with.

Since PayPal is also registered with the Dutch Chamber of Commerce in the Netherlands with a Dutch address, the third-party garnishment would be possible at PayPal’s Dutch branch.

However, since everything is done digitally at PayPal, the question arises as to whether the Dutch branch is "involved". According to PayPal’s website, the final bank transactions are made via a bank account in Germany and the server is located in the USA. On the other hand, many activities also take place at the Dutch office, according to PayPal’s website.

If the attachment by third-parties is possible at the Dutch branch, it is nevertheless important, according to Dutch case law, to verify whether the Dutch garnishment is recognized by - in this case - Luxembourg law. In the event of non-recognition, it would theoretically be possible to do an attachment in both the Netherlands and in Luxembourg. The Dutch Supreme Court has ruled that in such cases seizure on Dutch territory is not possible. In such cases it is therefore necessary to do the seizure under Luxembourg law directly in Luxembourg.

Attachment of the debtor’s PayPal account in Luxembourg?

It is by European law also possible to seize in Luxembourg under Luxembourg law.

Within the European Union, EU member states recognize each other's judgments. Enforcement shall be governed by the law of the Member State in which the attachment is made, in this case Luxembourg. According to the law of this country, it must be possible to execute attachments by third-parties.

In the case of PayPal, it must therefore be examined whether it is possible in Luxembourg to do a third-party seizure of the account balance. Luxembourg law actually allows a third-party seizure similar to that in the Netherlands.

In the event of a garnishment under Luxembourg law, a Luxembourg judicial officer will execute the third-party garnishment at PayPal. As this is an international case, it may take some time.


The balance on a PayPal account can be an interesting asset. However, the question is how the money can be collected from the account. Since there is no clear case law, it is not yet possible to say clearly whether a seizure is possible in the Netherlands. It is therefore advisable to do the garnishment in Luxembourg.

Author: Adil Tariki, LL.M.

Damsté advocaten – notarissen