Sift flour, stir together egg yolks with vanilla sugar, salt, and cinnamon. Cut butter into small cubes and coarsely knead together with flour. (Pieces of butter can still remain whole.)
Add powdered sugar, walnuts, egg yolk mixture and knead into a smooth dough. Wrap dough in plastic wrap and chill for about 30 minutes.
Knead dough on lightly floured surface and divide into four equal portions. Shape each dough portions to form finger-thick rolls and cut into small slices. Shape slices into Kipferln (crescents).
Place Kipferln onto a baking sheet lined with parchment paper and bake in a preheated oven at 350°F (180°C) for about 12 minutes. Let Kipferln cool briefly and toss in powdered sugar mixed with vanilla sugar.
NOTE: Sift vanilla-powdered sugar onto the baked vanilla Kipferln immediately, let cool, then sprinkle them again. This saves the step of rolling them in the vanilla-powdered sugar and the Kipferln don't break as easily.
TIP: Homemade vanilla sugar: 3 vanilla pods, just under 4 cups (500 g) powdered sugar (sifted). Cut vanilla pods lengthwise, place them with the powdered sugar into an airtight container and let stand several days.
Recipe courtesy of Austrian Desserts and Pastries by Dietmar Fercher and Andrea Karrer/Skyhorse Publishing, 2011.