Tested party — meaning in cross-border tax

The side whose functions are simpler, whose risks are fewer, and for which independent companies doing something similar can actually be found. That is one test rather than three: complexity is what makes comparables scarce, so the less complex party is the one whose margin can be measured against outside data with a straight face. Size is irrelevant and so is which entity the group happens to think of as the important one. Once the choice is made, it has to be supported by a functional and risk analysis describing what each party does, decides and funds, because the selection is the first thing an examiner questions.

Yes, and treating that as impossible is a common mistake. Nothing about ownership makes an entity complex. A parent that holds shares and provides routine administrative support while the operating subsidiary develops the technology, carries the market risk and funds the launches is the simpler party on the facts, and it is the one whose return can be measured. What decides the question is conduct, not the organisation chart. The practical difficulty is usually evidential rather than conceptual: the parent's accounts often mix the tested support activity with holding-company items, so a segmented result has to be built before any comparison can be made.

Then say so in the documentation rather than picking one and hoping. Where both sides contribute things for which no outside price exists, no single margin can stand for the whole arrangement, and a method that divides the combined result by reference to each side's contributions is the honest answer. The important discipline is that this conclusion is reached through evidence and recorded, because the alternative pattern, selecting the convenient party and describing the other as a mere risk-bearer, tends to survive exactly until the counterpart country reads the same facts from its own side and reaches the opposite conclusion.

Almost always, because the entity and the tested activity are rarely the same thing. If a company sells to related parties and to outside customers, or runs a second line of business, its entity-level result blends activities the comparable companies do not perform, and the comparison then measures the wrong business. What is needed is a segmented profit and loss for the tested activity alone, built from the ledger, with a stated basis for every allocated cost and every shared overhead. Keep the allocation basis constant from year to year and record which allocations required judgement, so the same segmentation can be reproduced and defended later.

It can, but only because the facts changed, and the file has to show which facts. A restructuring that moves risk control or intangible ownership across the border genuinely changes which party is the simpler one, and the analysis should follow. What does not justify a change is a poor result: switching sides because the other entity's figures compare better is visible immediately, since the functional description will not have moved with it. Where a change is real, document the date it took effect, the decisions and funding that moved, and expect the counterpart authority to look closely at the year in which the switch happened.

No, and the confusion causes real trouble. The tested party is an analytical choice about whose margin the documentation measures, made when the method is designed. Which entity receives a query is a matter for each tax authority, and an authority will happily examine its own resident taxpayer while the documentation measures the affiliate on the other side of the border. That situation is normal and workable, provided the local entity can produce the whole analysis, including the counterpart's segmented figures and the search behind the range. Where it cannot, the examination stalls on evidence rather than on the merits of the pricing.

For a resident, yes — worldwide gains are taxable, and the gain is computed in your own currency, so the exchange rate at purchase and at sale changes the number even when the local-currency price did not move. The country where the property sits usually taxes it too, often with a withholding or clearance step before closing, and that tax becomes a credit. A principal residence relief may apply to a home abroad on the same terms as one at home. See principal residence and foreign property.

A remittance is a transfer of money, not a category of income, and moving your own funds between your own accounts is not what creates tax. What can create tax is the income behind the money and the rules of the country it leaves. India, for instance, collects tax at source when a resident individual remits abroad under the Liberalised Remittance Scheme, and requires certification before certain payments leave. The transfer is the trigger for paperwork rather than for tax. See the LRS and tax collected at source.