1 cup (2 sticks) unsalted butter, at room temperature
1 1/4 cups powdered sugar
1 teaspoon pure vanilla extract
2 cups all-purpose flour
1/2 cup chocolate-hazelnut spread, such as Nutella, at room temperature
Place an oven rack in the center of the oven. Preheat the oven to 350 degrees F. Line 3 baking sheets with parchment paper or silicone liners. Set aside.
In an electric stand mixer fitted with a paddle attachment, beat the butter and 1/4 cup of the sugar on high speed until light and fluffy, 2 to 3 minutes. Beat in the vanilla. With the machine running, gradually add the flour until incorporated. Beat in the chocolate-hazelnut spread.
Roll the dough into 36 (1 1/2-inch) balls and place 12 balls of dough onto each baking sheet. Bake until the bottoms of the cookies flatten out slightly, 10 to 12 minutes. Cool for 5 minutes and transfer to a wire rack to cool completely, about 30 minutes.
Place the remaining 1 cup powdered sugar in a medium bowl. In batches, roll the cookies in the sugar until coated. Store in an airtight container at room temperature.