In a large bowl of an electric or stand mixer, cream butter and sugar together on medium speed.
Mix in the egg, vanilla extract, and milk. Gently stir in, until barely combined, flour, baking powder, cinnamon, nutmeg, salt and chocolate drops.
Spoon 1 heaping tablespoon of batter into the greased or lined with muffin paper liners muffin cavity. Layer with 1 teaspoon Nutella in the center and spoon another heaping tablespoon of batter on top. Repeat layering batter and Nutella into each muffin tin (8-9 muffins). Fill the empty muffin tins halfway with water for even baking.
Bake the muffins at 220?C for 5 minutes. Reduce temperature to 180?C and bake for an additional 13-17 minutes until batter is set. Allow muffins to cool for about 5 minutes.
Meanwhile, make the cinnamon-sugar topping. Melt the butter. In a separate small bowl, stir together the sugar and cinnamon. Dip the top of each muffin into the melted butter and dip into the cinnamon-sugar mixture. Swirl them around in the cinnamon-sugar a bit to make sure you get a thick coating. Set upright on cooling rack.