Beat butter, sugar, vanilla sugar and egg with your electric hand mixer till smooth.
In another bowl mix flour and baking powder. Slowyly add it at low speed till the mixture becomes crumbly. Swiftly knead with your hands so it holds together as a a ball. Place in a container with a lid and cover. Refrigerate for 1 to 2 hours.
Preheat your oven to 175 C / Gas 3-4.
Roll out the mixture about 3 to 4mm thick on a floured surface and cut out biscuits of your choice. Cut them out as close as possible to each other to avoid waste.
Carefully lift the biscuits onto a baking tray using a large knife. Gather all the scraps and briefly knead, then roll out again and cut out more biscuits.
Bake in the preheated oven until lightly coloured around the edges, about 8 to 10 minutes. Carefully transfer the biscuits to a wire rack using a large knife. Let cool completely.
To decorate stir icing sugar with just enough lemon juice to make a thick icing. If desired add a drop or two of food colouring. Spread icing over biscuits and add sprinkles. Let the icing dry before storing the biscuits in airtight tins.