Using an electric mixer, cream together the butter and granulated sugar until light and fluffy (3-4 minutes on medium speed).

Add the flour, powdered sugar and vanilla extract. Mix on low speed until a stiff dough forms. Shape dough into a disc, wrap in plastic wrap and refrigerate for 1 hour.

Line two baking sheets with parchment paper; set aside.

Working on a lightly-floured surface, roll the dough out into a 10”x13” rectangle.

Cut cookies into 1½” squares. Place cookies ½” apart on the prepared baking sheets. (Note: Cookies will not expand much while baking so feel free to keep them close on the pan.)

Reroll any leftover scraps and repeat process until all dough has been used.

Using a small round cookie cutter, cut circles out of the middle of half of the cookies.

Refrigerate baking sheets (with dough) for 30 minutes.

Preheat oven to 325°F.

Using a small fork, prick the tops of the cookies in several places.

Bake at 325°F for 20-22 minutes, or until edges of cookies turn light brown. Let cookies cool fully.

Dust tops of the cut-out cookies with confectioner’s sugar.

Spread Nutella on top of whole cookies and top with the cut-out cookies.