In a medium bowl, whisk together flour, baking powder, and salt; set aside.
In the bowl of a stand mixer fitted with the paddle attachment, beat butter, Nutella, and granulated sugar until light and fluffy, on medium-high speed, about 2 minutes. Add eggs, vanilla, and espresso and mix until incorporated. Reduce speed to low, add flour mixture and milk, and mix until just combined. Fold in 1/2 cup hazelnuts and refrigerate dough until firm, at least 2 hours and up to 24 hours.
Heat oven to 350 degrees F. Line 2 baking sheets with parchment paper. Place remaining hazelnuts in a shallow bowl. Add confectioner’s sugar to another shallow bowl. Roll a heaping tablespoon of dough into a 1½-inch ball, roll the ball in the hazelnuts, and then in the powdered sugar and place it on the prepared baking sheet. Repeat with the remaining dough, spacing the balls about 2 inches apart. Bake until set, 8-10 minutes. Cool 5 minutes on baking sheet, then transfer to wire rack to cool completely.