SQL Server – Database Compatibility Requirement for Transactional Replication

Do these features depend on the compatibility level of the published database or does this rely only on the version of the server?

The short answer is Yes they do depend but to a certain extent only.

Compatibility level can have an affect on the publishing and subscribing databases, with respect to object ownership and the existence (or not) of a particular schema.

Also, have a look at sp_vupgrade_replication

From BOL:

SQL Server 2000 supports common schema changes to an existing publication database. You can add columns to, and drop columns from, a published table without dropping and recreating the publications and subscriptions referencing that table. Schema changes can be replicated during snapshot replication, transactional replication, and merge replication. Column additions and deletions are implemented at the table level and propagated to all Subscribers that receive data from that table.

Important: Schema changes to a published table must be made only through the replication publication properties dialog box in SQL Server Enterprise Manager or through replication stored procedures. Do not make schema changes to published tables using the SQL ALTER TABLE statements in a tool such as SQL Query Analyzer or by using SQL Server Enterprise Manager visual database tools. Changes made to the schema of a published table using these tools will not be propagated to Subscribers.

Refer to :

• Compatibility Levels and their effects.
• Using Multiple Versions of SQL Server in a Replication Topology

1) If we can set up the transactional replication between server A of version 2014 and server B of version 2012. Tried to Google out but could not find the exact documents because may be am looking somewhere wrong. Please suggest if it can be set up?

For your replication to work, the PUBLISHER and DISTRIBUTOR should be on same version. The subscriber can be on lower version.

From BOL :

For all types of replication, the Distributor version must be no earlier than the Publisher version. (Frequently, the Distributor is the same instance as the Publisher.)

For transactional replication, a Subscriber to a transactional publication can be any version within two versions of the Publisher version.

So, essentially, your SERVER A should be PUBLISHER and DISTRIBUTOR and your SERVER B should be SUBSCRIBER.

2) We need to implement encryption on server A, but this encrypted data needs not to go on server B as that is SAN encrypted. Is there a way we can do this, if replication can be successfully implemented as asked in point 1?

For your scenario, you should enable TDE on PUBLISHER database ONLY.

From BOL :

Replication does not automatically replicate data from a TDE-enabled database in an encrypted form. You must separately enable TDE if you want to protect the distribution and subscriber databases. Snapshot replication, as well as the initial distribution of data for transactional and merge replication, can store data in unencrypted intermediate files; for example, the bcp files. During transactional or merge replication, encryption can be enabled to protect the communication channel.