Line a baking sheet with parchment paper. Spoon out either 1-2 teaspoon of Nutella (about the size of a quarter, for smaller cookies) or 1-2 tablespoon of Nutella (about the size of a half dollar, for larger cookies) and place it on the parchment paper. If possible, try to keep Nutella in round or oval shapes. The amount of Nutella balls you need will depend on how big you're making the cookies (see recipe notes). Place tray with Nutella in the freezer while preparing the dough.
In a large bowl, whisk together the flour, baking soda, baking powder, and salt. Set bowl aside.
Drop mixer speed to low and add the vanilla extract and egg to the creamed butter, mixing thoroughly.
Remove bowl from mixer. Using a spatula, slowly add the dry ingredients in with the butter mixture until fully incorporated. Dough should be soft and slightly dewy when ready.
Cover bowl and place dough in the refrigerator to chill for 1 hour.
Preheat oven to 350 degrees F. Line a large baking sheet with parchment paper. Add the remaining 1/2 cup granulated sugar to a small bowl and set nearby.
Remove dough from refrigerator and frozen Nutella from freezer. For smaller cookies, scoop out about 1-2 teaspoons of cookie dough and flatten into a circle about 1-2 inches wide. For larger cookies, scoop out about 1-2 tablespoons of cookie dough and flatten into a circle about 2 inches wide. Repeat this step so you have two flat pieces of cookie dough. Put a piece of frozen Nutella between the two dough pieces and pinch the sides closed. Roll cookie into a ball shape, then toss cookie ball in the bowl of sugar, coating the outside. Place finished cookie ball on prepared baking sheet. Repeat this step until all dough and Nutella is used, placing cookies about 2 inches apart on the baking sheet. Note: as you work, you may need to pause to freeze the Nutella again so that it keeps it's shape.
For smaller cookies, bake cookies for 10-12 minutes or until the top of the cookie begins to crinkle and the bottom sides turn a light golden brown. For larger cookies, bake 14-16 minutes or until top of the cookie beings to crinkle and bottom sides turn a light golden brown.
Let cookies rest on the baking sheet for 5-10 minutes, then transfer to a wire cooling rack to cool completely.
For smaller cookies, this recipe should yield about 14-16 cookies. For larger cookies, it should yield about 10-12.
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