Cream the butter, cream cheese, and sugar until smooth. Add the vanilla extract and all-purpose flour and mix until well combined.
Place the cookie dough into a plastic bag and refrigerate for one hour.
Line a baking sheet with parchment paper and pre-heat your oven to 375 degrees F.
Using a cookie scoop, scoop the dough out and roll it into 1-inch balls. Make indentation of each cookie with thumb. Fill each indentation with 1 tsp Nutella. Use two spoons to pour in the Nutella. Bake for 12 minutes.
Let the cookies slightly cool before enjoying. Sprinkle with some powdered sugar, if desired.